XLV dominated by bears dragging the market lower throughout the day
Health Care Select Sector SPDR ETF (XLV) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
XLV ended Wednesday at 106.05 losing $0.18 (-0.17%). The bears were in full control today, moving the market lower 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 (XLV as at Sep 16, 2020):
Wednesday's trading range has been $1.08 (1.01%), that's below the last trading month's daily average range of $1.60. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLV. Prices continued to consolidate within a tight trading range between 105.23 and 107.08 where it has been caught now for the last three trading days.
Notwithstanding a strong opening the ETF closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical resistance level at 106.67 (R1). After having been unable to move lower than 105.96 in the previous session, the market found buyers again around the same price level today at 105.93. The last time this happened on September 11th, XLV gained 1.43% on the following trading day.
While XLV is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the nearby swing high at 107.08 where further buy stops might get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Black Candle" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for XLV. Out of 509 times, XLV closed higher 59.72% 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 64.64% with an average market move of 0.89%.