TSM closes lower for the 2nd day in a row
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, TSM ended the month 38.96% higher at 78.89 after losing $1.04 (-1.3%) today, notably underperforming the S&P 500 (0.77%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (TSM as at Jul 31, 2020):
Friday's trading range has been $2.26 (2.84%), that's slightly above the last trading month's daily average range of $2.25. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for TSM.
One bullish candlestick pattern matches today's price action, the Bullish Hikkake Pattern. The last time a Bullish Hikkake Pattern showed up on July 23rd, TSM gained 9.69% on the following trading day.
Prices are trading close to the key technical support level at 76.49 (S1).
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling might accelerate should prices move below the nearby swing low at 76.49 where further sell stops could get triggered.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Taiwan Semiconductor. Out of 302 times, TSM closed higher 55.63% 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 58.94% with an average market move of 1.02%.