IAU closes within previous day's range after lackluster session
iShares Gold Trust ETF (IAU) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
IAU ended Wednesday at 18.70 gaining $0.05 (0.27%). Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (IAU as at Sep 16, 2020):
Wednesday's trading range has been $0.17 (0.9%), that's below the last trading month's daily average range of $0.25. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for IAU. Prices continued to consolidate within a tight trading range between 18.49 and 18.80 where it has been caught now for the whole last trading week.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 18.59 (S1). After having been unable to move above 18.77 in the prior session, the market ran into sellers again around the same price level today, failing to move higher than 18.80. The last time this happened on September 8th, IAU actually gained 1.03% on the following trading day.
Although 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.
Selling could accelerate should prices move below the close-by swing low at 18.59 where further sell stops might get triggered. As prices are trading close to September's high at 19.00, upside momentum could speed up should IAU ETF mark new highs for the month.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for IAU ETF. Out of 492 times, IAU closed higher 51.63% 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 52.64% with an average market move of 0.23%.