ASX closes within prior day's range after lackluster session
S&P/ASX 200 Index (ASX) Technical Analysis Report for Jan 11, 2019 | by Techniquant Editorial Team
ASX ended the week 1.61% higher at 5774.60 after losing $20.70 (-0.36%) today. Trading $13.30 higher after the open, the stock index was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on December 30, 2018, ASX lost -1.57% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (ASX as at Jan 11, 2019):
Friday's trading range has been $34.00 (0.59%), that's far below the last trading month's daily average range of $72.69. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ASX.
In spite of a strong opening ASX 200 closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical resistance level at 5809.20 (R1).
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 5633.75.
Although the index is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for ASX 200. Out of 87 times, ASX closed higher 64.37% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 57.47% with an average market move of 0.34%.