XLI closes within prior day's range
Industrial Select Sector SPDR ETF (XLI) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLI ended the month 4.41% higher at 71.73 after losing $0.27 (-0.38%) today. Trading up to $1.18 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (XLI as at Jul 31, 2020):
Friday's trading range has been $1.35 (1.88%), that's above the last trading month's daily average range of $1.08. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLI.
Two candlestick patterns are matching today's price action, the Southern Doji which is known as bullish pattern and one neutral pattern, the Doji.
After trading as low as 70.53 during the day, the ETF found support at the 20-day moving average at 70.79. The last time this happened on May 11th, XLI actually lost -2.81% on the following trading day. Prices are trading close to the key technical resistance level at 72.15 (R1).
Though XLI is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 72.89 where further buy stops might get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for XLI. Out of 288 times, XLI closed higher 55.90% 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 60.42% with an average market move of 0.54%.