GE breaks below key technical support level
General Electric Company (GE) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, GE ended the month -11.13% lower at 6.07 after losing $0.19 (-3.04%) today on high volume, strongly underperforming the S&P 500 (0.77%). Today's close at 6.07 marks the lowest recorded closing price since May 15th.
Daily Candlestick Chart (GE as at Jul 31, 2020):
Friday's trading range has been $0.28 (4.48%), that's above the last trading month's daily average range of $0.22. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for GE.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 6.15 (now R1), which is likely to act as resistance going forward. The last time this happened on July 24th, GE lost -2.19% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day although could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 6.81.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 5.48, downside momentum could speed up should the market break out to new lows for the year.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for General Electric. Out of 224 times, GE closed higher 52.68% 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 52.68% with an average market move of -0.31%.