SQ fails to close above 20-day moving average
Square Inc. Class A (SQ) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 4th day in a row, SQ ended Thursday at 56.03 gaining $3.64 (6.95%), outperforming the S&P 500 (6.24%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (SQ as at Mar 26, 2020):
Thursday's trading range has been $5.47 (10.17%), that's slightly below the last trading month's daily average range of $6.10. 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 strongly higher than usual for SQ.
After spiking up to 59.25 during the day, the market found resistance at the 20-day moving average at 58.83. After having been unable to move above 58.10 in the previous session, the stock ran into sellers again around the same price level today, missing to move higher than 59.25. The last time this happened on March 13th, SQ lost -28.56% on the following trading day.
Though Square is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Square. Out of 231 times, SQ closed higher 59.31% 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 54.11% with an average market move of 1.46%.