XLV closes lower for the 6th day in a row
Health Care Select Sector SPDR ETF (XLV) Technical Analysis Report for Sep 23, 2020 | by Techniquant Editorial Team
Moving lower for the 6th day in a row, XLV finished Wednesday at 101.90 losing $1.06 (-1.03%). Today's close at 101.90 marks the lowest recorded closing price since July 13th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 102.03, the market confirmed its breakout through the prior session low after trading up to $0.23 below it intraday.
Daily Candlestick Chart (XLV as at Sep 23, 2020):
Wednesday's trading range has been $1.63 (1.58%), that's slightly below the last trading month's daily average range of $1.75. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for XLV.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. The last time this happened on September 18th, XLV lost -2.24% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the Last Engulfing Bottom Pattern which is known as bullish pattern and one bearish pattern, the Black Candle.
Prices are trading close to the key technical support level at 101.23 (S1). The ETF found buyers again today around 101.80 for the third trading day in a row after having found demand at 102.03 in the previous session and at 101.74 two days ago.
Crossing below the lower Bollinger Band for the first time since Monday, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 105.80 or signal the beginning of a strong momentum breakout leading to even lower prices.
Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Selling might accelerate should prices move below the close-by swing low at 101.74 where further sell stops could get activated. Trading close to July's low at 99.68 we might 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 OHLC Patterns based market condition "Black Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for XLV. Out of 510 times, XLV closed higher 59.61% 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 64.51% with an average market move of 0.88%.