XLU breaks back above 20-day moving average
Utilities Select Sector SPDR Fund (XLU) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
XLU ended the week 3.05% higher at 56.48 after gaining $0.62 (1.11%) today ahead of tomorrow's Memorial Day market holiday. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (XLU as at May 22, 2020):
Friday's trading range has been $0.85 (1.52%), that's below the last trading month's daily average range of $1.21. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLU. Prices continued to consolidate within a tight trading range between 55.68 and 57.42 where it has been caught now for the whole last trading week.
Even with a weak opening the market managed to close above the prior day's open and close, forming a bullish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns.
The ETF managed to close back above the 20-day moving average at 56.38. When this moving average was crossed above the last time on Monday, XLU actually lost -1.65% on the following trading day. After having been unable to move lower than 55.75 in the previous session, XLU found buyers again around the same price level today at 55.68.
Though 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 57.06 where further buy stops might get activated. As prices are trading close to May's high at 57.44, upside momentum could speed up should the market mark new highs for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior low" stand out. Its common bullish interpretation has been confirmed for XLU. Out of 516 times, XLU closed higher 56.40% 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 58.91% with an average market move of 0.38%.