K breaks below key technical support level
Kellogg Company (K) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
K ended Wednesday at 63.93 tanking $1.70 (-2.59%) on high volume, strongly underperforming the S&P 500 (-0.46%). Today's close at 63.93 marks the lowest recorded closing price since June 26th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 65.12, Kellogg confirmed its breakout through the previous session low after trading up to $1.27 below it intraday.
Daily Candlestick Chart (K as at Sep 16, 2020):
Wednesday's trading range has been $1.96 (2.99%), that's above the last trading month's daily average range of $1.45. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for K.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on September 8th, K actually gained 0.29% on the following trading day.
Prices broke below the key technical support level at 64.27 (now R1), which is likely to act as resistance going forward.
Crossing below the lower Bollinger Band for the first time since September 11th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 68.30 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Kellogg. Out of 481 times, K closed higher 54.47% 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 60.08% with an average market move of 0.60%.