XLB closes within prior day's range
Materials Select Sector SPDR ETF (XLB) Technical Analysis Report for Oct 12, 2018 | by Techniquant Editorial Team
XLB finished the week -6.73% lower at 53.76 after gaining $0.15 (0.28%) today. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (XLB as at Oct 12, 2018):
Friday's trading range has been $1.26 (2.31%), that's far above the last trading month's daily average range of $0.75. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for XLB.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on Wednesday, XLB lost -1.16% on the following trading day.
After having been unable to move lower than 53.42 in the previous session, the ETF found buyers again around the same price level today at 53.37.
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 58.08.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "52 Week Low" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLB. Out of 27 times, XLB closed higher 51.85% 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 77.78% with an average market move of 7.01%.