DO finds buyers at key support level
Diamond Offshore Drilling Inc. (DO) Technical Analysis Report for Nov 09, 2018 | by Techniquant Editorial Team
DO ended the week 3.31% higher at 14.68 after gaining $0.37 (2.59%) today on high volume, strongly outperforming the S&P 500 (-0.92%). Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (DO as at Nov 09, 2018):
Friday's trading range has been $1.28 (9.2%), that's far above the last trading month's daily average range of $0.75. Things look different on the weekly timeframe, where the market's trading range of the last week has been way below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for DO. Prices continued to consolidate within a tight trading range between 13.56 and 14.85 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. Additionally, one bullish candlestick pattern matches today's price action, the White Candle. The last time a White Candle showed up on Wednesday, DO actually lost -2.12% on the following trading day.
After trading down to 13.57 earlier during the day, the stock bounced off the key technical support level at 13.59 (S2). The failure to close below the support might increase that levels significance as support going forward. After having been unable to move above 14.79 in the previous session, the share ran into sellers again around the same price level today, failing to move higher than 14.85.
Although the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
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 S2" stand out. Its common bullish interpretation has been confirmed for Diamond Offshore. Out of 8 times, DO closed higher 62.50% 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 two trading days, showing a win rate of 62.50% with an average market move of 0.52%.