DFS closes above its opening price after recovering from early selling pressure
Discover Financial Services (DFS) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, DFS finished the week 1.5% higher at 76.42 after gaining $0.22 (0.29%) today, slightly outperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Trading up to $0.28 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (DFS as at Feb 14, 2020):
Friday's trading range has been $0.79 (1.04%), that's far below the last trading month's daily average range of $1.41. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DFS. Prices continued to consolidate within a tight trading range between 75.02 and 76.79 where it has been caught now for the whole last trading week.
One bullish candlestick pattern matches today's price action, the Bullish Spinning Top.
Unable to break through the key technical resistance level at 76.63 (R1), the stock closed below it after spiking up to 76.79 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. When prices bounced off a significant resistance level the last time on Tuesday, DFS actually gained 0.38% on the following trading day.
Although the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Selling could accelerate should prices move below the close-by swing low at 75.44 where further sell stops might get activated. With prices trading close to this year's low at 73.43, downside momentum could speed up should Discover Financial break out to new lows for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Higher Closes" stand out. Its common bullish interpretation has been confirmed for Discover Financial. Out of 165 times, DFS closed higher 56.36% 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 57.58% with an average market move of 0.64%.