ITW unable to break through key resistance level
Illinois Tool Works Inc. (ITW) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving higher for the 4th day in a row, ITW ended Wednesday at 199.50 gaining $0.86 (0.43%) on high volume, outperforming the S&P 500 (-0.46%). Trading $1.40 higher after the open, Illinois Tool 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 (ITW as at Sep 16, 2020):
Wednesday's trading range has been $3.62 (1.81%), that's slightly below the last trading month's daily average range of $3.72. 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 ITW.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Additionally, two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Bearish High-Wave Candle which are both known as bearish patterns.
Unable to break through the key technical resistance level at 200.81 (R1), the stock closed below it after spiking up to 201.38 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. After having been unable to move lower than 198.04 in the previous session, the share found buyers again around the same price level today at 197.76. The last time this happened on August 28th, ITW actually lost -1.55% on the following trading day.
While the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
With prices trading close to this year's high at 202.68, upside momentum might accelerate should ITW be able to break out to new highs for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish High-Wave Candle" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Illinois Tool. Out of 23 times, ITW closed higher 60.87% 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 two trading days, showing a win rate of 69.57% with an average market move of 0.06%.