PEP finds buyers at key support level
PepsiCo Inc. (PEP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, PEP ended the week 1.11% higher at 146.99 after gaining $0.52 (0.36%) today, slightly outperforming the Nasdaq 100 (0.29%). Today's close at 146.99 marks the highest recorded closing price ever. Trading up to $0.63 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (PEP as at Feb 14, 2020):
Friday's trading range has been $1.16 (0.79%), that's below the last trading month's daily average range of $1.75. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly lower than usual for PEP.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
After trading down to 145.94 earlier during the day, the share bounced off the key technical support level at 146.42 (S1). The failure to close below the support could increase that levels importance as support going forward. When prices bounced off a significant support level the last time on February 7th, PEP gained 0.20% on the following trading day. After having been unable to move above 147.13 in the previous session, PepsiCo ran into sellers again around the same price level today, missing to move higher than 147.10.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might speed up should prices move above the nearby swing high at 147.13 where further buy stops could get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for PepsiCo. Out of 613 times, PEP closed higher 54.32% 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 57.10% with an average market move of 0.37%.