PLNUSD still stuck within tight trading range
Polish Zloty/US Dollar (PLNUSD) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, PLNUSD finished the month 1.2% higher at 0.2526 after gaining 3 pips (0.12%) today. Trading up to 16 pips lower after the open, PLN/USD managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (PLNUSD as at Jun 30, 2020):
Tuesday's trading range has been 29 pips (1.15%), that's slightly below the last trading month's daily average range of 33 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly lower than usual for PLNUSD. Prices continued to consolidate within a tight trading range between 0.2504 and 0.2549 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns.
After trading down to 0.2507 earlier during the day, the market bounced off the key technical support level at 0.2521 (S1). The failure to close below the support could increase that levels importance as support going forward. When prices bounced off a significant support level the last time on June 15th, PLNUSD actually lost -1.21% on the following trading day. After spiking up to 0.2536 during the day, the forex pair found resistance at the 20-day moving average at 0.2534. The pair was bought again around 0.2507 after having seen lows at 0.2507, 0.2506 and 0.2504 in the last three trading sessions. Obviously there is something going on at that level.
The currency shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the nearby swing high at 0.2555 where further buy stops could get activated. Selling might speed up should prices move below the close-by swing low at 0.2504 where further sell stops could get triggered. As prices are trading close to June's low at 0.2495, downside momentum might accelerate should the FX pair mark new lows for the month.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish High-Wave Candle" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for PLN/USD. Out of 59 times, PLNUSD closed lower 52.54% 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 64.41% with an average market move of -0.38%.