EFA finds support at 50-day moving average
iShares MSCI EAFE ETF (EFA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, EFA finished the month 1.94% higher at 62.05 after tanking $1.35 (-2.13%) today on high volume. This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 62.31, the ETF confirmed its breakout through the prior session low after trading up to $0.65 below it intraday.
Daily Candlestick Chart (EFA as at Jul 31, 2020):
Friday's trading range has been $1.35 (2.14%), that's far above the last trading month's daily average range of $0.67. 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 EFA.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 61.66 during the day, the market found support at the 50-day moving average at 61.93. EAFE ETF closed below the 200-day moving average at 62.88 for the first time since July 14th. When this moving average was crossed below the last time on June 11th, EFA actually gained 1.73% on the following trading day.
Though EFA is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to July's low at 60.75, downside momentum could accelerate should the ETF mark new lows for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Very Strong Down Move" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for EAFE ETF. Out of 146 times, EFA closed higher 59.59% 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 64.38% with an average market move of 0.51%.