EEM closes lower for the 2nd day in a row
iShares MSCI Emerging Markets ETF (EEM) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, EEM ended the week 1.11% higher at 36.43 after losing $0.77 (-2.07%) today ahead of tomorrow's Memorial Day market holiday.
Daily Candlestick Chart (EEM as at May 22, 2020):
Friday's trading range has been $0.31 (0.85%), that's far below the last trading month's daily average range of $0.53. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for EEM.
Two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 36.29 (S1). The market closed back below the 20-day moving average at 36.51 for the first time since May 15th. When this moving average was crossed below the last time on May 15th, EEM actually gained 3.91% on the following trading day.
The ETF shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling might speed up should prices move below the close-by swing low at 35.56 where further sell stops could get activated. As prices are trading close to May's low at 35.20, downside momentum might accelerate should EEM ETF 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 "Gap Down" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for EEM ETF. Out of 359 times, EEM closed higher 54.87% 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 59.05% with an average market move of 0.40%.