XLF closes higher for the 2nd day in a row
Financial Select Sector SPDR Fund (XLF) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, XLF finished the month -1.11% lower at 23.15 after gaining $0.32 (1.4%) today. The bulls were in full control today, moving the market higher throughout the whole session. Closing above Monday's high at 22.98, the ETF confirmed its breakout through the previous session high after trading up to $0.32 above it intraday.
Daily Candlestick Chart (XLF as at Jun 30, 2020):
Tuesday's trading range has been $0.61 (2.69%), that's slightly below the last trading month's daily average range of $0.71. 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 XLF. Prices continued to consolidate within a tight trading range between 22.52 and 23.64 where it has been caught now for the whole last trading week.
Despite a weak opening the market managed to close above the prior day's open and close, forming a bullish Engulfing Candle. The last time this candlestick pattern showed up on June 25th, XLF actually lost -4.28% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the White Candle which is known as bullish pattern and one bearish pattern, the Bearish Hikkake Pattern.
XLF managed to close back above the 50-day moving average at 23.02. Prices are trading close to the key technical resistance level at 23.53 (R1). After having been unable to move lower than 22.63 in the previous session, the ETF found buyers again around the same price level today at 22.69.
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 could accelerate should prices move above the close-by swing high at 23.64 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 22.52 where further sell stops might get activated.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for XLF. Out of 625 times, XLF closed higher 52.48% 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 60.00% with an average market move of 0.60%.