CVS finds buyers at key support level
CVS Health Corporation (CVS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CVS ended the month -3.12% lower at 62.94 after losing $1.06 (-1.66%) today on high volume, strongly underperforming the S&P 500 (0.77%). Closing below Thursday's low at 63.28, the market confirmed its breakout through the previous session low after trading up to $0.99 below it intraday.
Daily Candlestick Chart (CVS as at Jul 31, 2020):
Friday's trading range has been $1.61 (2.52%), that's above the last trading month's daily average range of $1.31. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CVS.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
After trading down to 62.29 earlier during the day, the share bounced off the key technical support level at 62.33 (S1). The failure to close below the support might increase that levels significance as support going forward. When prices bounced off a significant support level the last time on Tuesday, CVS gained 1.50% on the following trading day. The stock closed back below the 20-day moving average at 63.68.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Selling could speed up should prices move below the nearby swing low at 62.11 where further sell stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for CVS Health. Out of 428 times, CVS closed higher 58.88% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 56.78% with an average market move of 0.28%.