XLY breaks below key technical support level
Consumer Discret Sel Sect SPDR ETF (XLY) Technical Analysis Report for Sep 18, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, XLY ended the week -1.49% lower at 143.89 after losing $2.03 (-1.39%) today. Today's close at 143.89 marks the lowest recorded closing price since August 14th. Closing below Thursday's low at 144.70, the market confirmed its breakout through the previous session low after trading up to $2.01 below it intraday.
Daily Candlestick Chart (XLY as at Sep 18, 2020):
Friday's trading range has been $3.74 (2.55%), that's above the last trading month's daily average range of $2.57. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for XLY.
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. The last time a Black Candle showed up on Wednesday, XLY lost -1.41% on the following trading day.
Prices broke below the key technical support level at 144.46 (now R1), which is likely to act as resistance going forward. After having been unable to move above 146.87 in the prior session, the ETF ran into sellers again around the same price level today, failing to move higher than 146.43.
Though XLY 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 Price Action based market condition "3 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for XLY. Out of 132 times, XLY closed higher 64.39% 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 62.88% with an average market move of 0.63%.