EDC finds buyers at key support level
Direxion Emerging Markets Bull 3X Shares (EDC) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
EDC finished the month 19.01% higher at 44.52 after losing $0.59 (-1.31%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (EDC as at Jun 30, 2020):
Tuesday's trading range has been $1.12 (2.5%), that's below the last trading month's daily average range of $1.94. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for EDC. Prices continued to consolidate within a tight trading range between 43.76 and 45.81 where it has been caught now for the last three trading days.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the Hammer. The last time a Hammer showed up on March 13th, EDC actually lost -34.58% on the following trading day.
After trading down to 43.85 earlier during the day, Direxion Emerging bounced off the key technical support level at 44.14 (S1). The failure to close below the support could increase that levels importance as support going forward. The market found buyers again today around 43.85 for the third trading day in a row after having found demand at 43.76 in the previous session and at 43.90 two days ago.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Selling might accelerate should prices move below the nearby swing low at 43.76 where further sell stops could get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior two Lows" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for Direxion Emerging. Out of 52 times, EDC closed lower 55.77% 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 63.46% with an average market move of -3.98%.