VAR finds buyers around 173.50 for the third day in a row
Varian Medical Systems Inc. (VAR) Technical Analysis Report for Aug 05, 2020 | by Techniquant Editorial Team
VAR finished Wednesday at 173.51 losing $0.99 (-0.57%), notably underperforming the S&P 500 (0.64%). Closing below Tuesday's low at 173.60, Varian Medical confirmed its breakout through the prior session low after trading up to $0.10 below it intraday.
Daily Candlestick Chart (VAR as at Aug 05, 2020):
Wednesday's trading range has been $1.77 (1.01%), that's far below the last trading month's daily average range of $3.47. Things look different on the weekly timeframe, where the market's trading range of the last week has been way above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for VAR.
Notwithstanding a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns. The last time a Black Candle showed up on July 24th, VAR actually gained 4.63% on the following trading day.
Prices are trading close to the key technical resistance level at 176.19 (R1). The stock found buyers again today around 173.50 for the third trading day in a row after having found demand at 173.60 in the prior session and at 173.20 two days ago.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day while could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 135.45.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term. With its 50-day moving average crossing above its 200-day moving average, the share has entered a so-called "Golden Cross" for the first time since April 2nd. Showing increasing upward momentum in the short and medium-term the "Golden Cross" is known to indicate a potential bull market on the horizon.
Buying could accelerate should prices move above the close-by swing high at 176.19 where further buy stops might get triggered.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Varian Medical. Out of 58 times, VAR closed higher 60.34% 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 63.79% with an average market move of 1.19%.