VSTM closes below its opening price unable to hold early session gains
Verastem Inc. (VSTM) Technical Analysis Report for Mar 15, 2019 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, VSTM ended the week 11.47% higher at 3.11 after losing $0.06 (-1.89%) today, strongly underperforming the S&P 500 (0.5%). Trading $0.06 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 below Thursday's low at 3.15, Verastem confirmed its breakout through the prior session low after trading up to $0.04 below it intraday.
Daily Candlestick Chart (VSTM as at Mar 15, 2019):
Friday's trading range has been $0.12 (3.79%), that's below the last trading month's daily average range of $0.24. 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 slightly higher than usual for VSTM.
One bullish candlestick pattern matches today's price action, the Bullish Hikkake Pattern.
Unable to break through the key technical resistance level at 3.20 (R1), the share closed below it after spiking up to 3.23 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. When prices bounced off a significant resistance level the last time on Tuesday, VSTM actually gained 3.40% on the following trading day. After having been unable to move lower than 3.15 in the previous session, the market found buyers again around the same price level today at 3.11.
Although VSTM is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Its common bearish interpretation has been confirmed for Verastem. Out of 217 times, VSTM closed lower 54.38% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after five trading days, showing a win rate of 56.22% with an average market move of 0.03%.