MELI breaks below Tuesday's low
MercadoLibre Inc. (MELI) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MELI finished Wednesday at 1003.00 losing $26.99 (-2.62%), underperforming the Nasdaq 100 (-1.67%). Today's close at 1003.00 marks the lowest recorded closing price since July 24th. Closing below Tuesday's low at 1015.00, the market confirmed its breakout through the prior session low after trading up to $14.49 below it intraday.
Daily Candlestick Chart (MELI as at Sep 16, 2020):
Wednesday's trading range has been $48.30 (4.67%), that's slightly above the last trading month's daily average range of $46.28. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MELI.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 991.82 (S1). After having been unable to move above 1054.71 in the previous session, the stock ran into sellers again around the same price level today, failing to move higher than 1048.81. The last time this happened on September 9th, MELI lost -1.55% on the following trading day.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Trading close to July's low at 941.44 we could see further downside momentum if potential sell stops at the level get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for MercadoLibre. Out of 297 times, MELI closed higher 56.23% 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 55.56% with an average market move of 1.54%.