VSTM closes within prior day's range after lackluster session
Verastem Inc. (VSTM) Technical Analysis Report for Jul 08, 2020 | by Techniquant Editorial Team
VSTM ended Wednesday at 1.53 gaining $0.03 (2.0%), notably outperforming the S&P 500 (0.78%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (VSTM as at Jul 08, 2020):
Wednesday's trading range has been $0.08 (5.33%), that's below the last trading month's daily average range of $0.11. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for VSTM.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving lower in the previous session, the stock managed to close higher but below the prior day's open, forming a bullish Harami Candle. The last time this candlestick pattern showed up on December 6, 2019, VSTM gained 3.79% on the following trading day.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and might now be heading back up towards the mean of the Bollinger Bands at 1.74.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could speed up should prices move below the nearby swing low at 1.47 where further sell stops might get triggered.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed above the lower Bollinger Band" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for Verastem. Out of 57 times, VSTM closed lower 52.63% 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 seven trading days, showing a win rate of 56.14% with an average market move of -0.16%.