ITW breaks back below 50-day moving average
Illinois Tool Works Inc. (ITW) Technical Analysis Report for Jan 11, 2019 | by Techniquant Editorial Team
ITW ended the week 2.46% higher at 130.31 after losing $1.13 (-0.86%) today, underperforming the S&P 500 (-0.01%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (ITW as at Jan 11, 2019):
Friday's trading range has been $1.73 (1.33%), that's far below the last trading month's daily average range of $3.42. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ITW.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving higher in the previous session, Illinois Tool closed lower but above the prior day's open today, forming a bearish Harami Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Hanging Man which are both known as bearish patterns.
Prices are trading close to the key technical support level at 128.19 (S1). The share closed back below the 50-day moving average at 130.77. When this moving average was crossed below the last time on December 14, 2018, ITW lost -2.24% on the following trading day.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might accelerate should prices move above the nearby swing high at 131.46 where further buy stops could get activated. Selling might speed up should prices move below the close-by swing low at 127.32 where further sell stops could get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 50" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Illinois Tool. Out of 90 times, ITW closed higher 58.89% 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 63.33% with an average market move of 1.27%.