RGLD finds buyers at key support level
Royal Gold Inc. (RGLD) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
RGLD finished Wednesday at 130.61 edging higher $0.38 (0.29%), outperforming the S&P 500 (-0.46%). 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 (RGLD as at Sep 16, 2020):
Wednesday's trading range has been $2.50 (1.9%), that's far below the last trading month's daily average range of $3.99. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for RGLD. Prices continued to consolidate within a tight trading range between 127.82 and 132.66 where it has been caught now for the last three trading days.
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, three candlestick patterns are matching today's price action, the Homing Pigeon which is known as bullish pattern and two bearish patterns, the Bearish Short Candle and the Black Candle.
After trading down to 129.65 earlier during the day, the stock bounced off the key technical support level at 129.70 (S1). The failure to close below the support might increase that levels importance as support going forward. After having been unable to move above 132.66 in the previous session, Royal Gold ran into sellers again around the same price level today, missing to move higher than 132.15. The last time this happened on September 4th, RGLD lost -1.52% on the following trading day.
Although the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the nearby swing high at 132.66 where further buy stops could get triggered. Selling might accelerate should prices move below the close-by swing low at 127.82 where further sell stops could get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Royal Gold. Out of 426 times, RGLD closed higher 54.46% 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 58.92% with an average market move of 0.88%.