ERJ breaks back below 20-day moving average
Embraer S.A. (ERJ) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
ERJ finished the week 1.69% higher at 17.43 after losing $0.18 (-1.02%) today on low volume, strongly underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (ERJ as at Feb 14, 2020):
Friday's trading range has been $0.41 (2.32%), that's above the last trading month's daily average range of $0.36. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for ERJ.
Notwithstanding a strong opening Embraer S. A. closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on Monday, ERJ actually gained 2.47% on the following trading day.
Prices are trading close to the key technical support level at 17.16 (S1). The share closed back below the 20-day moving average at 17.51. The market found buyers again today around 17.25 for the third trading day in a row after having found demand at 17.26 in the prior session and at 17.31 two days ago.
Though the stock is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might accelerate should prices move above the nearby swing high at 17.81 where further buy stops could get triggered. With prices trading close to this year's low at 16.66, downside momentum might speed up should ERJ break out to new lows for the year. As prices are trading close to February's low at 16.93, downside momentum could accelerate should Embraer S. A. mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. Its common bullish interpretation has been confirmed for Embraer S. A.. Out of 85 times, ERJ closed higher 52.94% 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 four trading days, showing a win rate of 56.47% with an average market move of 0.16%.