NTES closes lower for the 2nd day in a row
NetEase Inc. (NTES) Technical Analysis Report for Jul 23, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, NTES finished Thursday at 455.42 losing $9.69 (-2.08%), but still outperforming the Nasdaq 100 (-2.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Wednesday's low at 462.12, the stock confirmed its breakout through the prior session low after trading up to $9.47 below it intraday.
Daily Candlestick Chart (NTES as at Jul 23, 2020):
Thursday's trading range has been $12.86 (2.76%), that's slightly above the last trading month's daily average range of $12.58. 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 NTES.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 452.65 during the day, the market found support at the 20-day moving average at 454.86. Prices broke below the key technical support level at 458.85 (now R1), which is likely to act as resistance going forward. The last time this happened on July 15th, NTES lost -4.70% on the following trading day.
While the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 446.58 where further sell stops could get triggered.
Among the eight 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 NetEase. Out of 296 times, NTES closed higher 56.08% 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 57.77% with an average market move of 1.68%.