HD pushes through key technical resistance level
Home Depot Inc. (HD) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
HD finished Thursday at 195.21 gaining $13.45 (7.4%), strongly outperforming the Dow Indu. (6.38%). The bulls were in full control today, moving the market higher throughout the whole session. Closing above Wednesday's high at 191.55, the market confirmed its breakout through the previous session high after trading up to $6.65 above it intraday.
Daily Candlestick Chart (HD as at Mar 26, 2020):
Thursday's trading range has been $15.70 (8.56%), that's slightly above the last trading month's daily average range of $14.37. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for HD.
One bullish candlestick pattern matches today's price action, the White Candle.
Buyers managed to take out the key technical resistance level at 184.84 (now S1), which is likely to act as support going forward. The last time this happened on March 10th, HD actually lost -5.68% on the following trading day. After spiking up to 198.20 during the day, Home Depot found resistance at the 20-day moving average at 197.85. After having been unable to move lower than 180.00 in the prior session, the share found buyers again around the same price level today at 182.50.
Although the stock is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish. With its 50-day moving average crossing below its 200-day moving average, HD has entered a so-called "Death Cross" for the first time since April 10, 2019. Showing increasing downward momentum in the short and medium-term the "Death Cross" is known to indicate a potential bear market on the horizon.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Resistance R1" stand out. Its common bullish interpretation has been confirmed for Home Depot. Out of 261 times, HD closed higher 54.79% 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 66.28% with an average market move of 0.93%.