LPX breaks below key technical support level
Louisiana-Pacific Corporation (LPX) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, LPX finished Wednesday at 31.99 losing $0.62 (-1.9%), significantly underperforming the S&P 500 (-0.46%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 32.58, the market confirmed its breakout through the previous session low after trading up to $0.66 below it intraday.
Daily Candlestick Chart (LPX as at Sep 16, 2020):
Wednesday's trading range has been $1.03 (3.13%), that's slightly below the last trading month's daily average range of $1.09. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for LPX.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 32.30 (now R1), which is likely to act as resistance going forward. The last time this happened on September 3rd, LPX lost -0.66% on the following trading day.
While Louisiana-Pacific is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test August's close-by low at 30.12.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near low of period" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Louisiana-Pacific. Out of 586 times, LPX closed higher 52.22% 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 52.39% with an average market move of 0.89%.