LQD slips to lowest close since July 31st
iShares iBoxx $ Investment Grade Corporate Bond (LQD) Technical Analysis Report for Sep 13, 2019 | by Techniquant Editorial Team
Moving lower for the 5th day in a row, LQD finished the week -2.63% lower at 124.72 after tanking $1.09 (-0.87%) today. This is the biggest single-day loss in over two months. Today's close at 124.72 marks the lowest recorded closing price since July 31st. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (LQD as at Sep 13, 2019):
Friday's trading range has been $0.89 (0.71%), that's far above the last trading month's daily average range of $0.66. 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 LQD.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 125.31 (now R1), which is likely to act as resistance going forward. The last time this happened on Tuesday, LQD lost -0.08% on the following trading day.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 127.74.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Further selling might move prices lower should the market test August's nearby low at 124.22.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "5 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for iShares iBoxx. Out of 21 times, LQD closed higher 61.90% 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 nine trading days, showing a win rate of 57.14% with an average market move of 0.06%.