MS finds buyers at key support level
Morgan Stanley (MS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MS ended the month 1.2% higher at 48.88 after edging lower $0.07 (-0.14%) today, underperforming the S&P 500 (0.77%). Today's close at 48.88 marks the lowest recorded closing price since July 9th. 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 (MS as at Jul 31, 2020):
Friday's trading range has been $0.76 (1.55%), that's below the last trading month's daily average range of $1.29. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MS.
One bullish candlestick pattern matches today's price action, the Takuri Line. The last time a Takuri Line showed up on May 4th, MS actually lost -0.29% on the following trading day.
After trading down to 48.27 earlier during the day, the share bounced off the key technical support level at 48.86 (S1). The failure to close below the support might increase that levels importance as support going forward.
Though the stock is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to July's low at 47.02, downside momentum might speed up should the market mark new lows for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Morgan Stanley. Out of 405 times, MS closed higher 58.02% 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 56.79% with an average market move of 0.62%.