ASX dominated by bears dragging the market lower throughout the day
S&P/ASX 200 Index (ASX) Technical Analysis Report for Oct 11, 2018 | by Techniquant Editorial Team
ASX finished Thursday at 5883.80 tanking $166.00 (-2.74%). This is the biggest single-day loss in over eight months. Today's close at 5883.80 marks the lowest recorded closing price since April 20th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 6022.70, the index confirms its breakout through the previous session's low having traded $138.90 below it intraday. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (ASX as at Oct 11, 2018):
Thursday's trading range was $166.00 (2.74%), that's far above last trading month's daily average range of $48.29. Weekly volatility is also higher, being way above the markets average with the monthly volatility being way above average.
Four candlestick patterns are matching today's price action, the Last Engulfing Bottom Pattern which is known as bullish pattern and three bearish patterns, the Bearish Closing Marubozu, the Bearish Marubozu and the Black Candle.
After having been unable to move above 6057.80 in the prior session, the market ran into sellers again around the same price level today, missing to move higher than 6049.80.
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 though might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 6145.06. The last time this happened on October 9th, ASX lost -2.74% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 13 market conditions that our engine recognized today, the statistics for the Price Action based condition "Down Close Near Low of Period" stands out. Although it is usually interpreted being bearish, it has actually shown to be bullish so far in the past for ASX 200. Out of 529 times during the last ten years, ASX closed higher 55.95% of the time on the next trading day. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.22% with an average market move of 0.33%.