HKDCAD still stuck within tight trading range
Hong Kong Dollar/Canadian Dollar (HKDCAD) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
HKDCAD finished Wednesday at 0.1700 losing 1 pip (-0.06%). 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 (HKDCAD as at Sep 16, 2020):
Wednesday's trading range has been 9 pips (0.53%), that's below the last trading month's daily average range of 11 pips. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for HKDCAD. Prices continued to consolidate within a tight trading range between 0.1693 and 0.1704 where it has been caught now for the whole last trading week.
Even with a strong opening the pair 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 Hanging Man. The last time a Hanging Man showed up on June 19th, HKDCAD lost -0.63% on the following trading day.
Prices are trading close to the key technical support level at 0.1693 (S1). The forex pair was sold again around 0.1703 after having seen highs at 0.1704, 0.1703 and 0.1704 in the last three trading sessions. Obviously there is something going on at that level.
Though the currency is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the close-by swing high at 0.1704 where further buy stops could get triggered. Selling might accelerate should prices move below the nearby swing low at 0.1693 where further sell stops could get activated.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hanging Man" stand out. Its common bearish interpretation has been confirmed for HKD/CAD. Out of 37 times, HKDCAD closed lower 59.46% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 56.76% with an average market move of -0.02%.