RMG.L closes below its opening price unable to hold early session gains
Royal Mail (RMG.L) Technical Analysis Report for Oct 12, 2018 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, RMG.L finished the week -1.28% lower at 340.60 after losing £0.60 (-0.18%) today, slightly underperforming the FTSE 100 (-0.16%). Trading £3.50 higher after the open, the market was unable to hold its gains as the bears took control ending the day below 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 (RMG.L as at Oct 12, 2018):
Friday's trading range has been £7.20 (2.1%), that's below the last trading month's daily average range of £18.96. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for RMG.L. Prices continued to consolidate within a tight trading range between 335.50 and 353.50 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, one bullish candlestick pattern matches today's price action, the Last Engulfing Bottom Pattern. The last time a Last Engulfing Bottom Pattern showed up on October 4th, RMG.L actually lost -2.62% on the following trading day.
Prices are trading close to the key technical support level at 335.30 (S1). After having been unable to move above 346.80 in the previous session, the share ran into sellers again around the same price level today, missing to move higher than 346.10.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the close-by swing low at 335.50 where further sell stops might get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Royal Mail. Out of 68 times, RMG.L closed higher 58.82% 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 54.41% with an average market move of 0.31%.