DG closes within previous day's range
Dollar General (DG) Technical Analysis Report for Oct 12, 2018 | by Techniquant Editorial Team
DG finished the week 0.96% higher at 104.76 after surging $2.80 (2.75%) today, strongly outperforming the S&P 500 (1.42%). This is the biggest single-day gain in over four months. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (DG as at Oct 12, 2018):
Friday's trading range has been $2.18 (2.11%), that's slightly above the last trading month's daily average range of $2.03. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DG.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
Buyers managed to take out the key technical resistance level at 103.37 (now S1), which is likely to act as support going forward. The last time this happened on Monday, DG actually lost -0.24% on the following trading day.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 107.00.
Though the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Close to S1 Support" stand out. Its common bullish interpretation has been confirmed for Dollar General. Out of 1,191 times, DG closed higher 52.31% 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 59.45% with an average market move of 1.04%.