VSTM closes within previous day's range after lackluster session
Verastem Inc. (VSTM) Technical Analysis Report for Jul 10, 2020 | by Techniquant Editorial Team
VSTM finished the week -13.17% lower at 1.45 after flat today, strongly underperforming the S&P 500 (1.05%). 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 10, 2020):
Friday's trading range has been $0.08 (5.56%), that's below the last trading month's daily average range of $0.11. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above 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. Additionally, one bullish candlestick pattern matches today's price action, the Inverted Hammer.
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 1.71. The last time this happened on Wednesday, VSTM actually lost -5.23% on the following trading day.
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 1.42 where further sell stops might get activated. With prices trading close to this year's low at 1.23, downside momentum could accelerate should the market break out to new lows for the year.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Inverted Hammer" stand out. Its common bullish interpretation has been confirmed for Verastem. Out of 11 times, VSTM closed higher 54.55% 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 54.55% with an average market move of 5.72%.