DFS breaks back below 20-day moving average
Discover Financial Services (DFS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, DFS finished the month -1.32% lower at 49.43 after losing $0.98 (-1.94%) today, notably underperforming the S&P 500 (0.77%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (DFS as at Jul 31, 2020):
Friday's trading range has been $2.17 (4.31%), that's slightly above the last trading month's daily average range of $2.08. 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 DFS.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar.
The market closed back below the 20-day moving average at 49.54 for the first time since July 21st. When this moving average was crossed below the last time on July 17th, DFS lost -3.06% on the following trading day. After having been unable to move above 50.48 in the prior session, the stock ran into sellers again around the same price level today, failing to move higher than 50.53.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Discover Financial. Out of 239 times, DFS closed higher 60.25% 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 54.81% with an average market move of 1.00%.