WLK finds buyers at key support level
Westlake Chemical Corporation (WLK) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
WLK finished Thursday at 40.54 edging lower $0.22 (-0.54%), significantly underperforming the S&P 500 (6.24%). Trading up to $0.89 lower after the open, Westlake Chemical 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 in a lackluster session.
Daily Candlestick Chart (WLK as at Mar 26, 2020):
Thursday's trading range has been $2.63 (6.5%), that's below the last trading month's daily average range of $4.14. 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 WLK.
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, two candlestick patterns are matching today's price action, the Northern Doji which is known as bearish pattern and one neutral pattern, the Doji.
After trading down to 39.55 earlier during the day, the share bounced off the key technical support level at 39.77 (S1). The failure to close below the support might increase that levels significance as support going forward. When prices bounced off a significant support level the last time on Monday, WLK gained 17.62% on the following trading day.
Although the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might accelerate should prices move above the close-by swing high at 43.12 where further buy stops could get triggered.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Westlake Chemical. Out of 416 times, WLK closed higher 56.01% 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 58.41% with an average market move of 1.30%.