FAF breaks below Thursday's low
First American Corporation (FAF) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, FAF finished the month 6.23% higher at 51.01 after losing $0.94 (-1.81%) today on high volume, strongly underperforming the S&P 500 (0.77%). Closing below Thursday's low at 51.66, the stock confirmed its breakout through the previous session low after trading up to $1.30 below it intraday.
Daily Candlestick Chart (FAF as at Jul 31, 2020):
Friday's trading range has been $1.75 (3.37%), that's slightly above the last trading month's daily average range of $1.66. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for FAF.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 50.36 during the day, the share found support at the 50-day moving average at 50.90. The last time this happened on February 26th, FAF actually lost -2.72% on the following trading day. The market closed below the 20-day moving average at 51.58 for the first time since July 13th.
First American shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for First American. Out of 299 times, FAF closed higher 54.52% 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 60.54% with an average market move of 1.10%.