WEN closes below its opening price unable to hold early session gains
Wendy's Company (WEN) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
WEN ended Thursday at 13.95 losing $0.47 (-3.26%) on high volume, notably underperforming the S&P 500 (6.24%). Trading $0.63 higher after the open, Wendy's was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on March 20th, WEN actually gained 4.39% on the following trading day. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (WEN as at Mar 26, 2020):
Thursday's trading range has been $1.44 (9.94%), that's slightly below the last trading month's daily average range of $1.72. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for WEN.
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. Notwithstanding a strong opening the stock closed below the previous day's open and close, forming a bearish Engulfing Candle.
Prices are trading close to the key technical support level at 12.87 (S1). Prices are trading close to the key technical resistance level at 15.26 (R1). After having been unable to move lower than 13.35 in the prior session, the share found buyers again around the same price level today at 13.68.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could speed up should prices move above the close-by swing high at 15.45 where further buy stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Wendy's. Out of 405 times, WEN closed higher 51.36% 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 55.80% with an average market move of 1.03%.