ROKU breaks below key technical support level
Roku Inc. (ROKU) Technical Analysis Report for Dec 07, 2018 | by Techniquant Editorial Team
ROKU ended the week -6.94% lower at 37.92 after losing $2.90 (-7.1%) today, notably underperforming the S&P 500 (-2.33%) following today's NFP report. Today's close at 37.92 marks the lowest recorded closing price since June 1st. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 38.04, the stock confirmed its breakout through the prior session low after trading up to $0.24 below it intraday.
Daily Candlestick Chart (ROKU as at Dec 07, 2018):
Friday's trading range has been $3.68 (9.04%), that's above the last trading month's daily average range of $2.81. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently just the same than usual for ROKU.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 40.31 (now R1), which is likely to act as resistance going forward. The last time this happened on Tuesday, ROKU actually gained 2.61% on the following trading day. After having been unable to move lower than 38.04 in the previous session, the share found buyers again around the same price level today at 37.80.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could speed up should prices move below the close-by swing low at 37.51 where further sell stops might get activated.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Roku. Out of 23 times, ROKU closed higher 60.87% 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 60.87% with an average market move of 3.63%.