PLNUSD breaks below key technical support level
Polish Zloty/US Dollar (PLNUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
PLNUSD ended the week 2.03% higher at 0.2416 after losing 11 pips (-0.45%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (PLNUSD as at May 22, 2020):
Friday's trading range has been 20 pips (0.82%), that's below the last trading month's daily average range of 23 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for PLNUSD.
Prices broke below the key technical support level at 0.2417 (now R1), which is likely to act as resistance going forward.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 0.2390. The last time this happened on March 10th, PLNUSD lost -0.50% on the following trading day.
While PLN/USD 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 nearby swing high at 0.2434 where further buy stops could get activated. Further buying might move prices higher should the market test April's close-by high at 0.2437.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Its common bearish interpretation has been confirmed for PLN/USD. Out of 374 times, PLNUSD closed lower 49.47% 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 52.14% with an average market move of -0.09%.