VSTM breaks back below 200-day moving average
Verastem Inc. (VSTM) Technical Analysis Report for Jun 26, 2020 | by Techniquant Editorial Team
VSTM finished the week -3.33% lower at 1.74 after tanking $0.15 (-7.94%) today on high volume, notably underperforming the S&P 500 (-2.42%). This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 1.85, Verastem confirmed its breakout through the previous session low after trading up to $0.16 below it intraday.
Daily Candlestick Chart (VSTM as at Jun 26, 2020):
Friday's trading range has been $0.23 (12.11%), that's far above the last trading month's daily average range of $0.11. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for VSTM.
Regardless of a strong opening the market 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. The last time a Black Candle showed up on June 10th, VSTM lost -6.11% on the following trading day.
The stock closed back below the 200-day moving average at 1.79 for the first time since June 17th.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Further selling might move prices lower should the market test May's close-by low at 1.61.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Its common bearish interpretation has been confirmed for Verastem. Out of 96 times, VSTM closed lower 56.25% 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 10 trading days, showing a win rate of 63.54% with an average market move of -1.46%.