XLP runs into sellers around 65.43 for the third day in a row
Consumer Staples Select Sector SPDR Fund (XLP) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLP finished Wednesday at 64.69 losing $0.29 (-0.45%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 64.89, the market confirmed its breakout through the prior session low after trading up to $0.26 below it intraday.
Daily Candlestick Chart (XLP as at Sep 16, 2020):
Wednesday's trading range has been $0.80 (1.23%), that's slightly below the last trading month's daily average range of $0.89. 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 XLP.
Notwithstanding a strong opening the ETF closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 64.96 (now R1), which is likely to act as resistance going forward. The last time this happened on September 10th, XLP actually gained 0.56% on the following trading day. XLP ran into sellers again today around 65.43 for the third trading day in a row after having found sellers at 65.46 in the prior session and at 65.37 two days ago.
Although the market 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 accelerate should prices move above the nearby swing high at 65.46 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 64.15 where further sell stops might get activated.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for XLP. Out of 297 times, XLP closed higher 60.27% 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 63.30% with an average market move of 0.62%.