ROK stuck within tight trading range
Rockwell Automation Inc. (ROK) Technical Analysis Report for Jul 23, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ROK ended Thursday at 225.99 edging lower $0.61 (-0.27%) on low volume, but still outperforming the S&P 500 (-1.23%). Trading $1.84 higher after the open, Rockwell Automation was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on July 13th, ROK actually gained 3.43% on the following trading day. 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 (ROK as at Jul 23, 2020):
Thursday's trading range has been $3.07 (1.36%), that's below the last trading month's daily average range of $4.38. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ROK. Prices continued to consolidate within a tight trading range between 224.19 and 228.99 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Bearish Spinning Top which are both known as bearish patterns.
Unable to break through the key technical resistance level at 227.19 (R1), the market closed below it after spiking up to 228.20 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. After having been unable to move lower than 224.87 in the prior session, the stock found buyers again around the same price level today at 225.13.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 228.99 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 221.42 where further sell stops might get activated. With prices trading close to this year's high at 230.71, upside momentum could accelerate should the share be able to break out to new highs for the year.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Rockwell Automation. Out of 309 times, ROK closed higher 55.99% 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 58.25% with an average market move of 1.03%.