GRFS finds buyers at key support level
Grifols S.A. (GRFS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
GRFS ended the month 3.45% higher at 18.87 after losing $0.44 (-2.28%) today, significantly underperforming the S&P 500 (0.77%). The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (GRFS as at Jul 31, 2020):
Friday's trading range has been $0.67 (3.46%), that's far above the last trading month's daily average range of $0.45. 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 GRFS. Prices continued to consolidate within a tight trading range between 18.59 and 19.36 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Black Candle and the Dark Cloud Cover which are both known as bearish patterns. The last time a Dark Cloud Cover showed up on June 23rd, GRFS lost -5.20% on the following trading day.
After trading down to 18.69 earlier during the day, the share bounced off the key technical support level at 18.72 (S1). The failure to close below the support might increase that levels significance as support going forward. Grifols S. A. closed back below the 20-day moving average at 19.17. The market was sold again around 19.36 after having seen highs at 19.32, 19.30 and 19.40 in the last three trading sessions. Obviously there is something going on at that level.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 19.40 where further buy stops might get activated. Selling could speed up should prices move below the nearby swing low at 18.59 where further sell stops might get triggered. As prices are trading close to July's low at 18.22, downside momentum could accelerate should the stock mark new lows for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Dark Cloud Cover" stand out. Its common bearish interpretation has been confirmed for Grifols S. A.. Out of 4 times, GRFS closed lower 75.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 50.00% with an average market move of -2.17%.