ZBH breaks below key technical support level
Zimmer Biomet Holdings Inc. (ZBH) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ZBH ended the month 12.99% higher at 134.86 after losing $3.44 (-2.49%) today, significantly underperforming the S&P 500 (0.77%). Closing below Thursday's low at 135.07, the market confirmed its breakout through the prior session low after trading up to $1.71 below it intraday.
Daily Candlestick Chart (ZBH as at Jul 31, 2020):
Friday's trading range has been $4.27 (3.11%), that's slightly above the last trading month's daily average range of $3.85. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for ZBH.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle. The last time a Bullish Hikkake Pattern showed up on March 18th, ZBH gained 10.55% on the following trading day.
Prices broke below the key technical support level at 136.00 (now R1), which is likely to act as resistance going forward.
Although the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Selling could speed up should prices move below the close-by swing low at 130.93 where further sell stops might get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Zimmer Biomet. Out of 229 times, ZBH closed higher 55.46% 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 59.39% with an average market move of 0.75%.