WEN plunges -3.43% on high volume
Wendy's Company (WEN) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, WEN ended Wednesday at 21.11 tanking $0.75 (-3.43%) on high volume, significantly underperforming the S&P 500 (-0.46%). This is the biggest single-day loss in over two weeks. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 21.75, the stock confirmed its breakout through the prior session low after trading up to $0.80 below it intraday.
Daily Candlestick Chart (WEN as at Sep 16, 2020):
Wednesday's trading range has been $0.94 (4.29%), that's above the last trading month's daily average range of $0.70. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for WEN.
Two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns. The last time a Bearish Belt-hold showed up on September 9, 2019, WEN lost -10.21% on the following trading day.
After trading down to 20.95 earlier during the day, the share bounced off the key technical support level at 21.05 (S1). The failure to close below the support might increase that levels importance as support going forward. The market closed back below the 100-day moving average at 21.68.
Wendy's shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
As prices are trading close to September's low at 20.74, downside momentum could speed up should WEN mark new lows for the month.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Wendy's. Out of 13 times, WEN closed higher 61.54% 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 53.85% with an average market move of 0.94%.