TDG closes above its opening price after recovering from early selling pressure
Transdigm Group Incorporated Inc. (TDG) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, TDG finished the week 17.17% higher at 380.80 after gaining $5.45 (1.45%) today, strongly outperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Today's close at 380.80 marks the highest recorded closing price since March 26th. Trading up to $9.42 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on May 15th, TDG gained 14.01% on the following trading day. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (TDG as at May 22, 2020):
Friday's trading range has been $13.31 (3.52%), that's far below the last trading month's daily average range of $22.66. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for TDG.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Hanging Man.
Prices are trading close to the key technical resistance level at 390.64 (R1). After having been unable to move lower than 366.61 in the previous session, the market found buyers again around the same price level today at 368.74.
Though the stock is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could speed up should prices move above the close-by swing high at 390.64 where further buy stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Transdigm Group. Out of 88 times, TDG closed higher 57.95% 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 64.77% with an average market move of 0.91%.