VSTM closes above its opening price after recovering from early selling pressure
Verastem Inc. (VSTM) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
VSTM finished Wednesday at 1.38 losing $0.03 (-2.13%) on high volume, notably underperforming the S&P 500 (-0.46%). Trading up to $0.05 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (VSTM as at Sep 16, 2020):
Wednesday's trading range has been $0.14 (10.77%), that's far above the last trading month's daily average range of $0.09. 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.
One bullish candlestick pattern matches today's price action, the White Candle.
After trading as low as 1.25 during the day, the stock found support at the 20-day moving average at 1.28. The share closed back below the 50-day moving average at 1.38. When this moving average was crossed below the last time on April 27th, VSTM lost -10.90% on the following trading day.
Although Verastem is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 1.47 where further buy stops might get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near high of period" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Verastem. Out of 377 times, VSTM closed lower 57.03% 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 56.76% with an average market move of -0.79%.