XLE still stuck within tight trading range
Energy Select Sector SPDR Fund (XLE) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLE ended the week 6.92% higher at 38.48 after edging lower $0.24 (-0.62%) today on low volume ahead of tomorrow's Memorial Day market holiday. Trading up to $0.72 lower after the open, the ETF managed to reverse during the session as bulls took control ending the day above 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 (XLE as at May 22, 2020):
Friday's trading range has been $0.83 (2.16%), that's far below the last trading month's daily average range of $1.43. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLE. Prices continued to consolidate within a tight trading range between 37.69 and 39.63 where it has been caught now for the whole last trading week.
One bearish candlestick pattern matches today's price action, the Hanging Man. The last time a Hanging Man showed up on April 15th, XLE lost -4.27% on the following trading day.
Prices are trading close to the key technical resistance level at 39.18 (R1).
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the nearby swing high at 39.63 where further buy stops could get triggered.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for XLE. Out of 300 times, XLE closed higher 51.67% of the time on the next trading day after the market condition occurred.