EWP plummets, losing $0.67 (-2.87%) within a single day
iShares MSCI Spain Capped ETF (EWP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, EWP finished the month 0.8% higher at 22.64 after tanking $0.67 (-2.87%) today. This is the biggest single-day loss in over a month. Today's close at 22.64 marks the lowest recorded closing price since July 1st. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 22.80, the market confirmed its breakout through the prior session low after trading up to $0.34 below it intraday.
Daily Candlestick Chart (EWP as at Jul 31, 2020):
Friday's trading range has been $0.58 (2.52%), that's far above the last trading month's daily average range of $0.32. 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 EWP.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 22.46 earlier during the day, the ETF bounced off the key technical support level at 22.60 (S1). The failure to close below the support might increase that levels significance as support going forward. EWP closed below the 50-day moving average at 22.93 for the first time since May 19th.
Crossing below the lower Bollinger Band for the first time since March 16th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 23.49 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on March 16th, EWP actually gained 8.01% on the following trading day.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
As prices are trading close to July's low at 22.33, downside momentum could accelerate should the ETF mark new lows for the month.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for EWP. Out of 297 times, EWP closed higher 58.59% of the time on the next trading day after the market condition occurred.