RY finds buyers at key support level
Royal Bank Of Canada (RY) Technical Analysis Report for Jan 13, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, RY ended Monday at 80.23 gaining $0.38 (0.48%), slightly underperforming the S&P 500 (0.7%). Today's close at 80.23 marks the highest recorded closing price since December 3, 2019. Trading up to $0.28 lower after the open, the stock managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Friday's high at 80.14, the market confirmed its breakout through the previous session high after trading up to $0.10 above it intraday.
Daily Candlestick Chart (RY as at Jan 13, 2020):
Monday's trading range has been $0.55 (0.69%), that's slightly below the last trading month's daily average range of $0.57. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for RY.
After trading down to 79.69 earlier during the day, Royal Bank bounced off the key technical support level at 79.71 (S1). The failure to close below the support could increase that levels importance as support going forward. Prices are trading close to the key technical resistance level at 80.28 (R1). The share found buyers again today around 79.69 for the third trading day in a row after having found demand at 79.62 in the prior session and at 79.70 two days ago.
Crossing above the upper Bollinger Band for the first time since September 13, 2019, prices have shown unusually strong upward momentum in the short-term. This might either indicate a potential buying climax after which prices could head back down towards the mean of the Bollinger Bands at 79.37 or signal the beginning of a strong momentum breakout leading to even higher prices. The last time prices broke out above the upper Bollinger Band on September 9, 2019, RY gained 1.22% on the following trading day.
RY shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling might speed up should prices move below the nearby swing low at 79.62 where further sell stops could get triggered. With prices trading close to this year's low at 79.03, downside momentum might accelerate should the stock break out to new lows for the year.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. Its common bullish interpretation has been confirmed for Royal Bank. Out of 90 times, RY closed higher 64.44% 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 four trading days, showing a win rate of 54.44% with an average market move of 0.07%.