XLRE closes within previous day's range
Real Estate Select Sector SPDR (XLRE) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLRE finished the month 4.17% higher at 36.26 after edging lower $0.04 (-0.11%) today. Trading up to $0.51 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 prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (XLRE as at Jul 31, 2020):
Friday's trading range has been $0.58 (1.6%), that's slightly below the last trading month's daily average range of $0.61. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLRE.
Four candlestick patterns are matching today's price action, the Tweezer Top which is known as bullish pattern, two bearish patterns, the Hanging Man and the Northern Doji and one neutral pattern, the Doji. The last time a Tweezer Top showed up on May 11th, XLRE actually lost -4.25% on the following trading day.
After trading down to 35.74 earlier during the day, the ETF bounced off the key technical support level at 36.25 (S1). The failure to close below the support could increase that levels significance as support going forward. After having been unable to move lower than 35.82 in the prior session, XLRE found buyers again around the same price level today at 35.74.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 35.21.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the nearby swing high at 36.60 where further buy stops might get triggered.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the upper Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLRE. Out of 35 times, XLRE closed higher 60.00% 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 four trading days, showing a win rate of 57.14% with an average market move of 0.42%.