XLY finds buyers around 120.30 for the third day in a row
Consumer Discret Sel Sect SPDR ETF (XLY) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
XLY finished the week 4.98% higher at 121.23 after edging lower $0.18 (-0.15%) today on low volume ahead of tomorrow's Memorial Day market holiday. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (XLY as at May 22, 2020):
Friday's trading range has been $1.26 (1.04%), that's far below the last trading month's daily average range of $2.18. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for XLY. Prices continued to consolidate within a tight trading range between 118.52 and 122.07 where it has been caught now for the whole last trading week.
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, 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 April 13th, XLY actually gained 3.91% on the following trading day.
Prices are trading close to the key technical support level at 119.94 (S1). The market found buyers again today around 120.30 for the third trading day in a row after having found demand at 119.94 in the prior session and at 120.23 two days ago.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 116.17.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the close-by swing high at 122.07 where further buy stops could get triggered. Selling might accelerate should prices move below the nearby swing low at 119.94 where further sell stops could get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for XLY. Out of 102 times, XLY closed higher 58.82% 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 67.65% with an average market move of 0.80%.