MNK declines to lowest close since January 14th
Mallinckrodt plc (MNK) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MNK finished the week -14.96% lower at 4.49 after losing $0.44 (-8.92%) today, significantly underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Today's close at 4.49 marks the lowest recorded closing price since January 14th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 4.82, the stock confirmed its breakout through the previous session low after trading up to $0.39 below it intraday.
Daily Candlestick Chart (MNK as at Feb 14, 2020):
Friday's trading range has been $0.74 (14.8%), that's far above the last trading month's daily average range of $0.49. 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 lower than usual for MNK.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 4.41 (S1). Unable to break through the key technical resistance level at 5.04 (R1), the share closed below it after spiking up to 5.17 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. When prices bounced off a significant resistance level the last time on February 3rd, MNK actually gained 5.92% on the following trading day.
While the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to February's low at 4.41, downside momentum could speed up should Mallinckrodt plc mark new lows for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. Its common bearish interpretation has been confirmed for Mallinckrodt plc. Out of 193 times, MNK closed lower 56.99% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 52.85% with an average market move of -0.46%.