IQ snaps to lowest close since January 3, 2019
iQIYI Inc. (IQ) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, IQ finished the week -13.65% lower at 15.50 after tanking $1.00 (-6.06%) today on high volume, notably underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. This is the biggest single-day loss in over two months. Today's close at 15.50 marks the lowest recorded closing price since January 3, 2019.
Daily Candlestick Chart (IQ as at May 22, 2020):
Friday's trading range has been $0.95 (5.93%), that's slightly above the last trading month's daily average range of $0.88. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for IQ.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
Unable to break through the key technical resistance level at 16.06 (R1), the stock closed below it after spiking up to 16.25 earlier during the day. The failure to close above the resistance might increase that levels importance going forward.
Crossing below the lower Bollinger Band for the first time since March 16th, 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 17.10 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 16th, IQ actually gained 3.53% on the following trading day.
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 14.51, downside momentum could accelerate should the market break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Hikkake Pattern" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for iQIYI. Out of 30 times, IQ closed lower 63.33% 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 66.67% with an average market move of -2.52%.