XLV finds support at 20-day moving average
Health Care Select Sector SPDR ETF (XLV) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, XLV finished the month 5.46% higher at 105.53 after losing $0.61 (-0.57%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (XLV as at Jul 31, 2020):
Friday's trading range has been $1.95 (1.84%), that's far above the last trading month's daily average range of $1.44. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLV.
Two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Hanging Man which are both known as bearish patterns. The last time a Hanging Man showed up on July 16th, XLV actually gained 1.37% on the following trading day.
After trading as low as 104.15 during the day, the market found support at the 20-day moving average at 104.37. After having been unable to move above 106.32 in the prior session, the ETF ran into sellers again around the same price level today, missing to move higher than 106.10.
Although XLV is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 20" stand out. Its common bullish interpretation has been confirmed for XLV. Out of 69 times, XLV closed higher 62.32% 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 62.32% with an average market move of 0.61%.