EWP closes within prior day's range after lackluster session
iShares MSCI Spain Capped ETF (EWP) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, EWP ended the week 3.59% higher at 20.22 after edging higher $0.01 (0.05%) today ahead of tomorrow's Memorial Day market holiday. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (EWP as at May 22, 2020):
Friday's trading range has been $0.17 (0.84%), that's far below the last trading month's daily average range of $0.32. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for EWP. Prices continued to consolidate within a tight trading range between 19.95 and 20.47 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Hanging Man.
After trading as low as 20.07 during the day, the ETF found support at the 20-day moving average at 20.13. The last time this happened on December 31, 2019, EWP gained 1.31% on the following trading day. Prices are trading close to the key technical resistance level at 20.35 (R1). After having been unable to move lower than 20.12 in the previous session, the market found buyers again around the same price level today at 20.07.
EWP shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the nearby swing high at 20.47 where further buy stops could get activated. Selling might speed up should prices move below the close-by swing low at 19.68 where further sell stops could get triggered. Further selling might move prices lower should the market test April's nearby low at 19.24.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for EWP. Out of 669 times, EWP closed higher 53.06% 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 51.87% with an average market move of 0.13%.