EA breaks below key technical support level
Electronic Arts Inc. (EA) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
EA ended Wednesday at 126.74 losing $1.59 (-1.24%), but still slightly outperforming the Nasdaq 100 (-1.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 127.50, the stock confirmed its breakout through the prior session low after trading up to $1.03 below it intraday.
Daily Candlestick Chart (EA as at Sep 16, 2020):
Wednesday's trading range has been $3.05 (2.36%), that's slightly below the last trading month's daily average range of $3.37. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for EA.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 127.54 (now R1), which is likely to act as resistance going forward. After having been unable to move above 129.86 in the previous session, the market ran into sellers again around the same price level today, failing to move higher than 129.52. The last time this happened on Monday, EA actually gained 1.70% on the following trading day.
Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Buying could accelerate should prices move above the close-by swing high at 129.86 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 124.40 where further sell stops might get activated.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Down Close Near Low of Period" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Electronic Arts. Out of 450 times, EA closed higher 54.00% 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 58.89% with an average market move of 1.65%.