VAR still stuck within tight trading range
Varian Medical Systems Inc. (VAR) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, VAR ended Wednesday at 173.28 gaining $0.11 (0.06%), outperforming the S&P 500 (-0.46%). Trading $0.14 higher after the open, the stock was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (VAR as at Sep 16, 2020):
Wednesday's trading range has been $0.29 (0.17%), that's far below the last trading month's daily average range of $0.64. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently notably lower than usual for VAR. Prices continued to consolidate within a tight trading range between 172.89 and 173.65 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 173.10 (S1). The market found buyers again today around 173.25 for the third trading day in a row after having found demand at 173.17 in the prior session and at 173.15 two days ago. The last time this happened on August 18th, VAR actually lost -0.06% on the following trading day.
Although the share is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 173.65 where further buy stops might get activated. Selling could accelerate should prices move below the close-by swing low at 172.89 where further sell stops might get triggered. With prices trading close to this year's high at 176.19, upside momentum could speed up should Varian Medical be able to break out to new highs for the year. As prices are trading close to September's high at 174.97, upside momentum might accelerate should VAR mark new highs for the month. Further selling could move prices lower should the market test August's nearby low at 172.04.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous High" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Varian Medical. Out of 599 times, VAR closed higher 59.60% 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 56.93% with an average market move of 0.59%.