TXN plunges, losing $3.73 (-2.78%) within a single day
Texas Instruments Incorporated (TXN) Technical Analysis Report for Jan 24, 2020 | by Techniquant Editorial Team
TXN ended the week -0.9% lower at 130.52 after tanking $3.73 (-2.78%) today, notably underperforming the Nasdaq 100 (-0.82%). This is the biggest single-day loss in over three months. The bears were in full control today, moving the market lower throughout the whole session. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (TXN as at Jan 24, 2020):
Friday's trading range has been $5.68 (4.21%), that's far above the last trading month's daily average range of $2.00. 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 TXN.
Even with a strong opening Texas Instruments closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 129.07 (S1). Prices broke below the key technical support level at 131.80 (now R1), which is likely to act as resistance going forward. The last time this happened on December 10, 2019, TXN actually gained 1.94% on the following trading day. After having been unable to move lower than 129.65 in the previous session, the market found buyers again around the same price level today at 129.75.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 129.92.
Though the share 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 accelerate should prices move below the nearby swing low at 129.65 where further sell stops could get triggered. With prices trading close to this year's low at 125.90, downside momentum might speed up should the stock break out to new lows for the year.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Texas Instruments. Out of 85 times, TXN closed higher 58.82% 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 64.71% with an average market move of 0.91%.