XLV finds buyers at key support level
Health Care Select Sector SPDR ETF (XLV) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
XLV finished the week -0.8% lower at 99.62 after edging higher $0.21 (0.21%) today ahead of tomorrow's Memorial Day market holiday. Trading up to $0.52 lower after the open, the ETF managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (XLV as at May 22, 2020):
Friday's trading range has been $0.80 (0.8%), that's far below the last trading month's daily average range of $1.62. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for XLV.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the Hammer.
After trading down to 98.90 earlier during the day, the market bounced off the key technical support level at 99.00 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on April 15th, XLV gained 2.18% on the following trading day. After having been unable to move lower than 98.83 in the prior session, XLV found buyers again around the same price level today at 98.90.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Selling could accelerate should prices move below the close-by swing low at 98.83 where further sell stops might get triggered. As prices are trading close to May's low at 96.89, downside momentum could speed up should the ETF mark new lows for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for XLV. Out of 413 times, XLV closed higher 60.05% 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 62.47% with an average market move of 0.57%.