EWJ breaks back above 200-day moving average
iShares MSCI Japan ETF (EWJ) Technical Analysis Report for Jun 01, 2020 | by Techniquant Editorial Team
EWJ finished Monday at 56.27 gaining $0.86 (1.55%). Today's close at 56.27 marks the highest recorded closing price since February 21st. The bulls were in full control today, moving the market higher throughout the whole session. Ending with a strong close near the high of the day sets a bullish note for the next session.
Daily Candlestick Chart (EWJ as at Jun 01, 2020):
Monday's trading range has been $0.71 (1.28%), that's far above the last trading month's daily average range of $0.54. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for EWJ.
Two candlestick patterns are matching today's price action, the Bullish Closing Marubozu and the White Candle which are both known as bullish patterns.
The market managed to close back above the 200-day moving average at 55.54.
Crossing above the upper Bollinger Band for the first time since May 28th, prices have shown unusually strong upward momentum in the short-term. This might either indicate a potential buying climax after which prices could head back down towards the mean of the Bollinger Bands at 52.90 or signal the beginning of a strong momentum breakout leading to even higher prices. The last time prices broke out above the upper Bollinger Band on May 26th, EWJ gained 1.29% on the following trading day.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the close-by swing high at 56.48 where further buy stops could get activated.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 200" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for EWJ. Out of 42 times, EWJ closed lower 50.00% 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 64.29% with an average market move of -0.79%.