TSCO breaks below key technical support level
Tractor Supply Company (TSCO) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
TSCO ended Wednesday at 138.25 losing $2.63 (-1.87%) on low volume, notably underperforming the S&P 500 (-0.46%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 138.69, the market confirmed its breakout through the previous session low after trading up to $0.69 below it intraday.
Daily Candlestick Chart (TSCO as at Sep 16, 2020):
Wednesday's trading range has been $3.55 (2.51%), that's slightly below the last trading month's daily average range of $3.68. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for TSCO.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 140.05 (now R1), which is likely to act as resistance going forward. After having been unable to move above 141.45 in the prior session, Tractor Supply ran into sellers again around the same price level today, missing to move higher than 141.55. The last time this happened on Monday, TSCO actually gained 1.98% on the following trading day.
Though 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.
Selling might speed up should prices move below the close-by swing low at 137.12 where further sell stops could get triggered.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Tractor Supply. Out of 284 times, TSCO closed higher 56.69% 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 52.46% with an average market move of 0.91%.