MCHP finds support at 20-day moving average
Microchip Technology Incorporated (MCHP) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
MCHP ended the week 5.1% higher at 87.81 after edging higher $0.18 (0.21%) today on low volume, slightly underperforming the Nasdaq 100 (0.38%) ahead of tomorrow's Memorial Day market holiday. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (MCHP as at May 22, 2020):
Friday's trading range has been $1.75 (2.01%), that's far below the last trading month's daily average range of $3.38. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for MCHP.
Two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns. The last time a White Candle showed up on Wednesday, MCHP actually lost -4.02% on the following trading day.
After trading as low as 86.43 during the day, Microchip Technology found support at the 20-day moving average at 86.48. Prices are trading close to the key technical resistance level at 89.83 (R1).
The share shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might speed up should prices move above the close-by swing high at 92.10 where further buy stops could get activated. Further buying might move prices higher should the market test April's nearby high at 92.72.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 20" stand out. Its common bullish interpretation has been confirmed for Microchip Technology. Out of 67 times, MCHP closed higher 59.70% 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 56.72% with an average market move of 0.52%.