XLP pushes through Wednesday's high
Consumer Staples Select Sector SPDR Fund (XLP) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
XLP finished Thursday at 53.76 gaining $2.79 (5.47%). The bulls were in full control today, moving the market higher throughout the whole session. Closing above Wednesday's high at 52.61, the ETF confirmed its breakout through the previous session high after trading up to $1.51 above it intraday.
Daily Candlestick Chart (XLP as at Mar 26, 2020):
Thursday's trading range has been $2.74 (5.31%), that's slightly below the last trading month's daily average range of $2.88. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for XLP.
One bullish candlestick pattern matches today's price action, the White Candle. The last time a White Candle showed up on March 17th, XLP actually lost -2.57% on the following trading day.
Buyers managed to take out the key technical resistance level at 51.91 (now S1), which is likely to act as support going forward.
Although the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish. With its 50-day moving average crossing below its 200-day moving average, XLP has entered a so-called "Death Cross" for the first time since March 21, 2019. Showing increasing downward momentum in the short and medium-term the "Death Cross" is known to indicate a potential bear market on the horizon.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "RSI(2) above 80" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for XLP. Out of 311 times, XLP closed higher 55.95% 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 59.49% with an average market move of 0.16%.