DBC breaks below key technical support level
PowerShares DB Commodity Tracking ETF (DBC) Technical Analysis Report for Oct 23, 2020 | by Techniquant Editorial Team
DBC ended the week -0.08% lower at 13.26 after losing $0.10 (-0.75%) today. Closing below Thursday's low at 13.30, the market confirmed its breakout through the previous session low after trading up to $0.08 below it intraday.
Daily Candlestick Chart (DBC as at Oct 23, 2020):
Friday's trading range has been $0.16 (1.2%), that's slightly above the last trading month's daily average range of $0.15. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DBC.
Even with a strong opening the ETF closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, 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 Black Candle showed up on Monday, DBC actually gained 1.13% on the following trading day.
Prices broke below the key technical support level at 13.29 (now R1), which is likely to act as resistance going forward.
Though DBC is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the five 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. Its common bearish interpretation has been confirmed for DBC. Out of 165 times, DBC closed lower 56.36% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 53.94% with an average market move of -0.39%.