VRTX unable to break through key resistance level
Vertex Pharmaceuticals Incorporated (VRTX) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
VRTX finished the month -6.31% lower at 272.00 after losing $7.40 (-2.65%) today on high volume, strongly underperforming the Nasdaq 100 (1.78%) following Thursday's earnings report. Today's close at 272.00 marks the lowest recorded closing price since June 15th. Closing below Thursday's low at 274.66, the stock confirmed its breakout through the previous session low after trading up to $6.41 below it intraday.
Daily Candlestick Chart (VRTX as at Jul 31, 2020):
VRTX reported earnings of $2.61 per share after Thursday's market close. With analysts having expected an EPS of $2.13, Vertex Pharmaceuticals Incorporated surpassed market expectations by 22.5%. The company's last earnings report was released on April 29, 2020, when Vertex Pharmaceuticals Incorporated reported earnings of $2.56 per share surpassing market expectations by 39.9%.
Friday's trading range has been $14.75 (5.29%), that's far above the last trading month's daily average range of $8.64. 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 slightly higher than usual for VRTX.
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.
Prices are trading close to the key technical support level at 266.43 (S1). Unable to break through the key technical resistance level at 282.76 (R2), the share closed below it after spiking up to 283.00 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. Vertex Pharmaceuticals ran into sellers again today around 283.00 for the third trading day in a row after having found sellers at 282.28 in the prior session and at 281.59 two days ago. The last time this happened on May 22nd, VRTX lost -6.48% on the following trading day.
Crossing below the lower Bollinger Band for the first time since July 24th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 288.83 or signal the beginning of a strong momentum breakout leading to even lower prices.
Though still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Further selling might move prices lower should the market test June's nearby low at 261.28.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed below last periods low" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Vertex Pharmaceuticals. Out of 450 times, VRTX closed higher 54.89% 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 61.11% with an average market move of 2.40%.