XLF closes lower for the 2nd day in a row
Financial Select Sector SPDR Fund (XLF) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLF finished the week 4.13% higher at 21.92 after edging lower $0.08 (-0.36%) today on low volume ahead of tomorrow's Memorial Day market holiday. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (XLF as at May 22, 2020):
Friday's trading range has been $0.32 (1.46%), that's far below the last trading month's daily average range of $0.53. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLF.
One bearish candlestick pattern matches today's price action, the Hanging Man. The last time a Hanging Man showed up on January 9th, XLF lost -0.74% on the following trading day.
The ETF shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might speed up should prices move above the close-by swing high at 22.21 where further buy stops could get triggered. Selling might accelerate should prices move below the nearby swing low at 21.58 where further sell stops could get activated. As prices are trading close to May's high at 22.32, upside momentum might speed up should the market mark new highs for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLF. Out of 282 times, XLF closed higher 53.90% 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 58.87% with an average market move of 0.43%.