SIMO breaks above 20-day moving average for the first time since January 16th
Silicon Motion Technology Corporation (SIMO) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 4th day in a row, SIMO finished Thursday at 35.49 gaining $1.12 (3.26%) on high volume, strongly underperforming the S&P 500 (6.24%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (SIMO as at Mar 26, 2020):
Thursday's trading range has been $2.19 (6.28%), that's slightly below the last trading month's daily average range of $2.34. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently notably lower than usual for SIMO.
The share managed to close above the 20-day moving average at 34.65 for the first time since January 16th. Unable to break through the key technical resistance level at 35.89 (R1), the stock closed below it after spiking up to 36.80 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. When prices bounced off a significant resistance level the last time on March 20th, SIMO actually gained 2.83% on the following trading day.
While Silicon Motion is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
As prices are trading close to March's high at 38.58, upside momentum might accelerate should the market mark new highs for the month.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "4 Consecutive Higher Closes" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Silicon Motion. Out of 71 times, SIMO closed lower 66.20% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after two trading days, showing a win rate of 53.52% with an average market move of -0.43%.