IWM closes lower for the 3rd day in a row
iShares Russell 2000 ETF (IWM) Technical Analysis Report for Dec 07, 2018 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, IWM finished the week -5.63% lower at 144.03 after losing $3.17 (-2.15%) today following today's NFP report. Today's close at 144.03 marks the lowest recorded closing price since September 21, 2017. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (IWM as at Dec 07, 2018):
Friday's trading range has been $4.98 (3.38%), that's far above the last trading month's daily average range of $3.13. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for IWM.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Unable to break through the key technical resistance level at 147.70 (R1), the ETF closed below it after spiking up to 148.26 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. After having been unable to move lower than 143.43 in the prior session, the market found buyers again around the same price level today at 143.28.
Crossing below the lower Bollinger Band for the first time since October 24th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 150.21 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 October 24th, IWM actually gained 2.17% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 142.50, downside momentum might accelerate should IWM ETF break out to new lows for the year.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for IWM ETF. Out of 154 times, IWM closed higher 59.74% 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 59.74% with an average market move of 0.73%.