EHC dominated by bears dragging the market lower throughout the day
Encompass Health Corporation (EHC) Technical Analysis Report for Apr 16, 2019 | by Techniquant Editorial Team
EHC ended Tuesday at 58.89 tanking $2.48 (-4.04%) on high volume, significantly underperforming the S&P 500 (0.05%). This is the biggest single-day loss in over two months. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 60.98, the share confirmed its breakout through the prior session low after trading up to $2.42 below it intraday.
Daily Candlestick Chart (EHC as at Apr 16, 2019):
Tuesday's trading range has been $3.36 (5.43%), that's far above the last trading month's daily average range of $1.15. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for EHC.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Regardless of a strong opening the stock closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns. The last time a Bearish Belt-hold showed up on December 3, 2018, EHC lost -1.99% on the following trading day.
Prices are trading close to the key technical support level at 58.41 (S1). The market closed back below the 20-day moving average at 59.80 for the first time since April 3rd.
Though Encompass Health is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
With prices trading close to this year's low at 57.69, downside momentum might speed up should EHC break out to new lows for the year. As prices are trading close to April's low at 57.78, downside momentum could accelerate should the share mark new lows for the month.
Among the 13 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. Although it is usually interpreted as bearish, it has actually shown to be bullish for Encompass Health. Out of 449 times, EHC closed higher 53.45% 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 60.13% with an average market move of 1.23%.