DPZ finds buyers at key support level
Domino's Pizza Inc (DPZ) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
DPZ ended the month 4.65% higher at 386.61 after gaining $2.08 (0.54%) today, slightly underperforming the S&P 500 (0.77%). Trading up to $6.97 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 386.04, Domino's Pizza confirmed its breakout through the previous session high after trading up to $1.08 above it intraday.
Daily Candlestick Chart (DPZ as at Jul 31, 2020):
Friday's trading range has been $9.17 (2.38%), that's slightly below the last trading month's daily average range of $11.00. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DPZ.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bullish Outside Bar. Additionally, one bullish candlestick pattern matches today's price action, the Takuri Line.
After trading down to 377.95 earlier during the day, the stock bounced off the key technical support level at 378.74 (S1). The failure to close below the support might increase that levels significance as support going forward. Prices are trading close to the key technical resistance level at 388.73 (R1). After having been unable to move above 386.04 in the prior session, the share ran into sellers again around the same price level today, missing to move higher than 387.12. The last time this happened on July 22nd, DPZ lost -2.00% on the following trading day.
Though DPZ is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the close-by swing high at 394.89 where further buy stops could get activated. Selling might accelerate should prices move below the nearby swing low at 376.58 where further sell stops could get triggered.
Among the 10 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 Domino's Pizza. Out of 416 times, DPZ closed higher 60.34% 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 62.50% with an average market move of 1.75%.