YUMC declines to lowest close since April 16th
Yum China Holdings Inc. (YUMC) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, YUMC finished the week -7.47% lower at 43.63 after tanking $3.89 (-8.19%) today on high volume, significantly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. This is the biggest single-day loss in over a year. Today's close at 43.63 marks the lowest recorded closing price since April 16th. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (YUMC as at May 22, 2020):
Friday's trading range has been $3.11 (6.67%), that's far above the last trading month's daily average range of $1.66. 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 YUMC.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 43.50 earlier during the day, Yum China bounced off the key technical support level at 43.52 (S1). The failure to close below the support could increase that levels significance as support going forward. The share closed below the 200-day moving average at 44.86 for the first time since April 24th.
Crossing below the lower Bollinger Band for the first time since March 12th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 47.48 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 11th, YUMC lost -6.08% on the following trading day.
The stock shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the 17 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Yum China. Out of 43 times, YUMC closed higher 62.79% 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 74.42% with an average market move of 2.84%.