RE closes above its opening price after recovering from early selling pressure
Everest Re Group Ltd. (RE) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
RE finished the week 21.75% higher at 205.68 after edging lower $0.33 (-0.16%) today, slightly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Trading up to $4.27 lower after the open, the share 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 failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (RE as at May 22, 2020):
Friday's trading range has been $5.09 (2.48%), that's below the last trading month's daily average range of $7.60. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for RE.
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. Additionally, one bearish candlestick pattern matches today's price action, the Hanging Man.
After having been unable to move above 206.38 in the previous session, the market ran into sellers again around the same price level today, missing to move higher than 206.08. The last time this happened on May 12th, RE lost -4.53% on the following trading day.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day although could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 177.36.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the close-by swing high at 206.38 where further buy stops might get activated. Further buying could move prices higher should the market test April's nearby high at 212.80.
Among the six 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. Though it is usually interpreted as bearish, it has actually shown to be bullish for Everest Re. Out of 646 times, RE closed higher 54.95% 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 57.89% with an average market move of 0.50%.