PEP dominated by bears dragging the market lower throughout the day
PepsiCo Inc. (PEP) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, PEP ended Wednesday at 134.98 losing $0.64 (-0.47%), but still strongly outperforming the Nasdaq 100 (-1.67%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 135.41, the stock confirmed its breakout through the prior session low after trading up to $0.62 below it intraday.
Daily Candlestick Chart (PEP as at Sep 16, 2020):
Wednesday's trading range has been $1.80 (1.32%), that's below the last trading month's daily average range of $2.60. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for PEP.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on September 10th, PEP actually gained 0.78% on the following trading day.
After trading down to 134.79 earlier during the day, the market bounced off the key technical support level at 134.82 (S1). The failure to close below the support might increase that levels importance as support going forward.
While PepsiCo 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 accelerate should prices move below the close-by swing low at 133.88 where further sell stops could get activated. Trading close to July's low at 131.28 we might see further downside momentum if potential sell stops at the level get triggered.
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. Though it is usually interpreted as bearish, it has actually shown to be bullish for PepsiCo. Out of 245 times, PEP closed higher 55.51% 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 63.67% with an average market move of 0.71%.