XLK runs into sellers again around 117.15
Technology Select Sector SPDR ETF (XLK) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
XLK finished Wednesday at 114.67 losing $1.80 (-1.55%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 115.69, the market confirmed its breakout through the prior session low after trading up to $1.13 below it intraday.
Daily Candlestick Chart (XLK as at Sep 16, 2020):
Wednesday's trading range has been $2.59 (2.21%), that's slightly below the last trading month's daily average range of $2.76. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLK.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on September 11th, XLK actually gained 2.10% on the following trading day.
Prices are trading close to the key technical support level at 114.10 (S1). After having been unable to move above 117.30 in the previous session, the ETF ran into sellers again around the same price level today, failing to move higher than 117.15.
Although XLK 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 close-by swing high at 117.30 where further buy stops might get activated. Further selling could move prices lower should the market test August's nearby low at 111.15.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near low of period" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for XLK. Out of 446 times, XLK closed higher 61.66% 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 10 trading days, showing a win rate of 63.45% with an average market move of 1.09%.