XLB closes below its opening price unable to hold early session gains
Materials Select Sector SPDR ETF (XLB) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
XLB finished the week 0.7% higher at 60.51 after edging higher $0.01 (0.02%) today ahead of tomorrow's Presidents' Day market holiday. Trading $0.22 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (XLB as at Feb 14, 2020):
Friday's trading range has been $0.39 (0.64%), that's below the last trading month's daily average range of $0.65. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLB.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, two candlestick patterns are matching today's price action, the Northern Doji which is known as bearish pattern and one neutral pattern, the Doji.
Prices are trading close to the key technical support level at 60.29 (S1). Prices are trading close to the key technical resistance level at 60.88 (R1). After having been unable to move lower than 60.34 in the previous session, the ETF found buyers again around the same price level today at 60.35. The last time this happened on Monday, XLB gained 0.55% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 60.88 where further buy stops could get triggered. Selling might speed up should prices move below the nearby swing low at 60.34 where further sell stops could get activated. With prices trading close to this year's high at 61.94, upside momentum might accelerate should XLB be able to break out to new highs for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLB. Out of 379 times, XLB closed higher 54.09% 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 57.52% with an average market move of 0.30%.