LUV finds buyers around 57.89 for the third day in a row
Southwest Airlines Company (LUV) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
LUV finished the week 1.24% higher at 57.97 after losing $0.57 (-0.97%) today on low volume, notably underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (LUV as at Feb 14, 2020):
Friday's trading range has been $0.94 (1.6%), that's slightly below the last trading month's daily average range of $1.22. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for LUV.
Despite a strong opening the stock closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on January 17th, LUV lost -2.67% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 57.85 (S1). The share found buyers again today around 57.89 for the third trading day in a row after having found demand at 57.85 in the prior session and at 58.00 two days ago.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling could speed up should prices move below the nearby swing low at 57.85 where further sell stops might get triggered.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Southwest Airlines. Out of 125 times, LUV closed higher 58.40% 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 62.40% with an average market move of 1.50%.