IRBT closes below its opening price unable to hold early session gains
iRobot Corporation (IRBT) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
IRBT ended Wednesday at 81.81 losing $1.68 (-2.01%) on high volume, strongly underperforming the S&P 500 (-0.46%). Trading $2.88 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (IRBT as at Sep 16, 2020):
Wednesday's trading range has been $5.48 (6.53%), that's far above the last trading month's daily average range of $3.48. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for IRBT.
Unable to break through the key technical resistance level at 85.47 (R2), iRobot closed below it after spiking up to 86.86 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. When prices bounced off a significant resistance level the last time on February 11, 2016, IRBT actually gained 4.61% on the following trading day.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 75.83.
The share shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R2" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for iRobot. Out of 3 times, IRBT closed higher 66.67% 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 100.00% with an average market move of 5.84%.