GS breaks below 200-day moving average for the first time since October 6th
Goldman Sachs Group Inc. (GS) Technical Analysis Report for Oct 27, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, GS ended Tuesday at 195.68 tanking $5.46 (-2.71%), strongly underperforming the Dow Indu. (-0.8%). This is the biggest single-day loss in over a month. Today's close at 195.68 marks the lowest recorded closing price since September 25th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 198.51, the stock confirmed its breakout through the previous session low after trading up to $3.10 below it intraday.
Daily Candlestick Chart (GS as at Oct 27, 2020):
Tuesday's trading range has been $5.18 (2.59%), that's above the last trading month's daily average range of $4.65. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GS.
One bearish candlestick pattern matches today's price action, the Black Candle.
The share closed below the 200-day moving average at 200.00 for the first time since October 6th.
Crossing below the lower Bollinger Band for the first time since September 23rd, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 204.81 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 September 23rd, GS actually gained 4.83% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
As prices are trading close to October's low at 195.29, downside momentum could speed up should the market mark new lows for the month.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Goldman Sachs. Out of 79 times, GS closed higher 62.03% 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 59.49% with an average market move of 0.70%.