HKDUSD breaks below Thursday's low
Hong Kong Dollar/US Dollar (HKDUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, HKDUSD finished the week -0.07% lower at 0.128926 after losing 23 pips (-0.02%) today on high volume. Today's close at 0.128926 marks the lowest recorded closing price since March 20th. Trading 47 pips higher after the open, the FX pair was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on May 14th, HKDUSD actually gained 0.02% on the following trading day. Closing below Thursday's low at 0.128944, HKD/USD confirmed its breakout through the previous session low after trading up to 43 pips below it intraday.
Daily Candlestick Chart (HKDUSD as at May 22, 2020):
Friday's trading range has been 100 pips (0.08%), that's far above the last trading month's daily average range of 42 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for HKDUSD.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day although could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 0.129001.
Though the pair 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 four market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for HKD/USD. Out of 173 times, HKDUSD closed higher 52.60% of the time on the next trading day after the market condition occurred.