EWZ stuck within tight trading range
iShares MSCI Brazil Capped ETF (EWZ) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
EWZ finished Wednesday at 30.98 edging higher $0.06 (0.19%) on low volume. Trading $0.40 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. 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 (EWZ as at Sep 16, 2020):
Wednesday's trading range has been $0.56 (1.81%), that's below the last trading month's daily average range of $0.79. 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 EWZ. Prices continued to consolidate within a tight trading range between 30.35 and 31.42 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Shooting Star which are both known as bearish patterns. The last time a Bearish Spinning Top showed up on September 4th, EWZ lost -2.76% on the following trading day.
Prices are trading close to the key technical support level at 30.80 (S1).
Though the ETF is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the close-by swing high at 31.44 where further buy stops might get triggered. Further buying could move prices higher should the market test August's nearby high at 32.41.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Shooting Star" stand out. Its common bearish interpretation has been confirmed for EWZ ETF. Out of 45 times, EWZ closed lower 60.00% 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 seven trading days, showing a win rate of 60.00% with an average market move of -0.11%.