HD runs into sellers around 267.17 for the third day in a row
Home Depot Inc. (HD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
HD ended the month 5.98% higher at 265.49 after losing $0.82 (-0.31%) today, underperforming the Dow Indu. (0.44%). Trading up to $4.39 lower after the open, the stock managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (HD as at Jul 31, 2020):
Friday's trading range has been $6.56 (2.48%), that's above the last trading month's daily average range of $4.74. 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 lower than usual for HD.
While trading as low as 260.61 during the day, the share has decisively rejected those price levels and formed a bullish Pin Bar closing $4.88 above today's low. Additionally, two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns.
After trading down to 260.61 earlier during the day, the market bounced off the key technical support level at 261.29 (S1). The failure to close below the support might increase that levels significance as support going forward. Home Depot ran into sellers again today around 267.17 for the third trading day in a row after having found sellers at 267.35 in the prior session and at 267.11 two days ago. The last time this happened on July 20th, HD actually gained 0.86% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 267.35 where further buy stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Pin Bar" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Home Depot. Out of 7 times, HD closed lower 85.71% 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 57.14% with an average market move of -1.43%.