UVXY closes below its opening price unable to hold early session gains
ProShares Ultra VIX Short-Term Futures (UVXY) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
UVXY ended the week -10.07% lower at 35.28 after edging lower $0.43 (-1.2%) today ahead of tomorrow's Memorial Day market holiday. Trading $0.88 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Wednesday, UVXY actually gained 3.51% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (UVXY as at May 22, 2020):
Friday's trading range has been $1.97 (5.44%), that's below the last trading month's daily average range of $3.98. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for UVXY. Prices continued to consolidate within a tight trading range between 33.83 and 38.17 where it has been caught now for the whole last trading week.
Prices are trading close to the key technical support level at 33.83 (S1). The ETF ran into sellers again today around 37.09 for the third trading day in a row after having found sellers at 36.92 in the previous session and at 36.56 two days ago.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Buying could accelerate should prices move above the nearby swing high at 38.17 where further buy stops might get activated. Selling could speed up should prices move below the close-by swing low at 33.83 where further sell stops might get triggered. As prices are trading close to May's low at 31.42, downside momentum could accelerate should UVXY mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. Its common bearish interpretation has been confirmed for UVXY. Out of 383 times, UVXY closed lower 62.92% 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 67.89% with an average market move of -3.89%.