LABU breaks back below 50-day moving average
Direxion Daily S&P Biotech Bull 3X ETF (LABU) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
LABU ended the month -9.64% lower at 53.69 after losing $4.17 (-7.21%) today on high volume. Today's close at 53.69 marks the lowest recorded closing price since June 18th. Closing below Thursday's low at 53.80, the market confirmed its breakout through the previous session low after trading up to $2.57 below it intraday.
Daily Candlestick Chart (LABU as at Jul 31, 2020):
Friday's trading range has been $7.27 (12.47%), that's above the last trading month's daily average range of $5.56. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for LABU.
Two candlestick patterns are matching today's price action, the Last Engulfing Bottom Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
The ETF closed back below the 50-day moving average at 56.55. After having been unable to move above 58.96 in the prior session, LABU ran into sellers again around the same price level today, failing to move higher than 58.50. The last time this happened on Tuesday, LABU lost -4.87% on the following trading day.
Though the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Bottom Pattern" stand out. Its common bullish interpretation has been confirmed for LABU. Out of 34 times, LABU closed higher 55.88% 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 two trading days, showing a win rate of 61.76% with an average market move of 0.65%.