NTAP breaks below key technical support level
NetApp Inc. (NTAP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, NTAP finished the week -5.41% lower at 54.24 after losing $0.94 (-1.7%) today, significantly underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NTAP as at Feb 14, 2020):
Friday's trading range has been $1.63 (2.95%), that's slightly above the last trading month's daily average range of $1.51. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for NTAP.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 53.17 (S1). Prices broke below the key technical support level at 55.00 (now R1), which is likely to act as resistance going forward. After having been unable to move above 55.60 in the prior session, the stock ran into sellers again around the same price level today, failing to move higher than 55.31. The last time this happened on Monday, NTAP actually gained 1.76% on the following trading day.
Although the share is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Selling could accelerate should prices move below the close-by swing low at 53.20 where further sell stops might get triggered. With prices trading close to this year's low at 53.17, downside momentum could speed up should NetApp break out to new lows for the year.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for NetApp. Out of 303 times, NTAP closed higher 57.43% 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 52.81% with an average market move of 0.75%.