XLRE breaks back below 200-day moving average
Real Estate Select Sector SPDR (XLRE) Technical Analysis Report for Sep 18, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLRE finished the week 0.14% higher at 35.60 after tanking $0.72 (-1.98%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 36.07, the market confirmed its breakout through the previous session low after trading up to $0.54 below it intraday.
Daily Candlestick Chart (XLRE as at Sep 18, 2020):
Friday's trading range has been $0.81 (2.23%), that's above the last trading month's daily average range of $0.67. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLRE.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 35.53 earlier during the day, the ETF bounced off the key technical support level at 35.58 (S1). The failure to close below the support could increase that levels importance as support going forward. XLRE closed back below the 200-day moving average at 35.87 for the first time since September 11th. When this moving average was crossed below the last time on September 10th, XLRE lost -0.34% on the following trading day.
While 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.
Selling could accelerate should prices move below the nearby swing low at 35.29 where further sell stops might get activated. Trading close to July's low at 34.36 we could see further downside momentum if potential sell stops at the level get triggered.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 200" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLRE. Out of 29 times, XLRE closed higher 55.17% 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 two trading days, showing a win rate of 65.52% with an average market move of 0.10%.