AMAT slips to lowest close since October 2nd
Applied Materials Inc. (AMAT) Technical Analysis Report for Oct 27, 2020 | by Techniquant Editorial Team
Moving lower for the 5th day in a row, AMAT ended Tuesday at 58.83 losing $0.68 (-1.14%) on low volume, strongly underperforming the Nasdaq 100 (0.82%). Today's close at 58.83 marks the lowest recorded closing price since October 2nd. The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (AMAT as at Oct 27, 2020):
Tuesday's trading range has been $1.22 (2.04%), that's slightly below the last trading month's daily average range of $1.40. 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 lower than usual for AMAT.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 58.20 (S1). After having been unable to move lower than 58.65 in the prior session, the market found buyers again around the same price level today at 58.77. The last time this happened on October 23rd, AMAT actually lost -2.36% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could speed up should prices move below the close-by swing low at 58.65 where further sell stops might get activated. As prices are trading close to October's low at 58.19, downside momentum could accelerate should the stock mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "5 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Applied Materials. Out of 27 times, AMAT closed higher 55.56% 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 59.26% with an average market move of 2.01%.