ETSY breaks below key technical support level
Etsy Inc. (ETSY) Technical Analysis Report for Jul 28, 2020 | by Techniquant Editorial Team
ETSY ended Tuesday at 102.45 losing $3.50 (-3.3%) on low volume, notably underperforming the S&P 500 (-0.65%). The bears were in full control today, moving the market lower throughout the whole session. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (ETSY as at Jul 28, 2020):
Tuesday's trading range has been $3.68 (3.48%), that's below the last trading month's daily average range of $4.92. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently significantly lower than usual for ETSY.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns. The last time a Bearish Short Candle showed up on June 1st, ETSY actually gained 4.16% on the following trading day.
Prices broke below the key technical support level at 103.94 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 101.59 in the previous session, the stock found buyers again around the same price level today at 101.99.
Although the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the close-by swing high at 106.78 where further buy stops might get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior low" stand out. Its common bullish interpretation has been confirmed for Etsy. Out of 282 times, ETSY closed higher 50.35% 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 56.38% with an average market move of 2.41%.