SQ closes within prior day's range
Square Inc. Class A (SQ) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
SQ finished Wednesday at 151.05 losing $3.45 (-2.23%), strongly underperforming the S&P 500 (-0.46%). Trading $3.80 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (SQ as at Sep 16, 2020):
Wednesday's trading range has been $9.12 (5.88%), that's slightly above the last trading month's daily average range of $8.25. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for SQ.
The market closed back below the 20-day moving average at 151.68. When this moving average was crossed below the last time on September 4th, SQ lost -4.97% on the following trading day. After having been unable to move above 158.50 in the prior session, Square ran into sellers again around the same price level today, failing to move higher than 159.00.
Although the stock is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near low of period" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Square. Out of 194 times, SQ closed higher 66.49% 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 61.34% with an average market move of 3.55%.