XLE closes within prior day's range
Energy Select Sector SPDR Fund (XLE) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLE ended the week 1.11% higher at 54.58 after losing $0.29 (-0.53%) today ahead of tomorrow's Presidents' Day market holiday. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (XLE as at Feb 14, 2020):
Friday's trading range has been $0.86 (1.56%), that's slightly above the last trading month's daily average range of $0.85. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLE.
Regardless of a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical resistance level at 55.18 (R1). After having been unable to move above 55.18 in the prior session, the ETF ran into sellers again around the same price level today, failing to move higher than 55.10. The last time this happened on February 6th, XLE lost -0.70% on the following trading day.
Although XLE is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the nearby swing high at 55.35 where further buy stops could get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for XLE. Out of 558 times, XLE closed higher 54.66% 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 eight trading days, showing a win rate of 53.41% with an average market move of 0.20%.