MBB runs into sellers around 110.82 for the third day in a row
iShares MBS ETF (MBB) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
MBB finished the month -0.34% lower at 110.70 after losing $0.09 (-0.08%) today on high volume. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 110.75, the ETF confirmed its breakout through the previous session low after trading up to $0.05 below it intraday.
Daily Candlestick Chart (MBB as at Jun 30, 2020):
Tuesday's trading range has been $0.12 (0.11%), that's far below the last trading month's daily average range of $0.19. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MBB.
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. The last time this happened on April 9th, MBB lost -0.43% on the following trading day. Despite a strong opening iShares MBS closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Unable to break through the key technical resistance level at 110.80 (R1), the market closed below it after spiking up to 110.82 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. MBB ran into sellers again today around 110.82 for the third trading day in a row after having found sellers at 110.81 in the previous session and at 110.83 two days ago.
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 nearby swing high at 110.83 where further buy stops might get activated. Selling could accelerate should prices move below the close-by swing low at 110.56 where further sell stops might get triggered.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for iShares MBS. Out of 67 times, MBB closed higher 59.70% 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 64.18% with an average market move of 0.07%.