SDS closes lower for the 2nd day in a row
ProShares UltraShort S&P500 (SDS) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, SDS finished the month -5.78% lower at 19.40 after losing $0.56 (-2.81%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 19.94, the market confirmed its breakout through the prior session low after trading up to $0.74 below it intraday.
Daily Candlestick Chart (SDS as at Jun 30, 2020):
Tuesday's trading range has been $0.83 (4.15%), that's slightly above the last trading month's daily average range of $0.75. 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 SDS.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 18.80 (S1). ProShares UltraShort closed back below the 20-day moving average at 19.46 for the first time since June 23rd. When this moving average was crossed below the last time on June 12th, SDS lost -1.92% on the following trading day.
Although the ETF is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Selling could accelerate should prices move below the nearby swing low at 18.78 where further sell stops might get triggered. With prices trading close to this year's low at 18.15, downside momentum could speed up should SDS break out to new lows for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Its common bearish interpretation has been confirmed for ProShares UltraShort. Out of 345 times, SDS closed lower 60.87% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 67.54% with an average market move of -1.06%.