HOG breaks below key technical support level
Harley-Davidson Inc. (HOG) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, HOG finished Wednesday at 26.44 losing $0.84 (-3.08%) on high volume, strongly underperforming the S&P 500 (-0.46%). Today's close at 26.44 marks the lowest recorded closing price since August 7th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 27.26, the market confirmed its breakout through the prior session low after trading up to $0.90 below it intraday.
Daily Candlestick Chart (HOG as at Sep 16, 2020):
Wednesday's trading range has been $0.98 (3.59%), that's slightly below the last trading month's daily average range of $0.99. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for HOG.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 26.81 (now R1), which is likely to act as resistance going forward.
Crossing below the lower Bollinger Band for the first time since March 12th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 28.05 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 11th, HOG lost -11.75% on the following trading day.
Though the stock is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test August's close-by low at 25.52.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Harley-Davidson. Out of 151 times, HOG closed higher 53.64% 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 six trading days, showing a win rate of 55.63% with an average market move of -0.22%.