ASX dominated by bears dragging the market lower throughout the day
S&P/ASX 200 Index (ASX) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, ASX ended the week 1.71% higher at 5497.00 after losing $53.40 (-0.96%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 5545.20, ASX 200 confirmed its breakout through the prior session low after trading up to $50.40 below it intraday.
Daily Candlestick Chart (ASX as at May 22, 2020):
Friday's trading range has been $74.90 (1.35%), that's below the last trading month's daily average range of $102.24. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for ASX.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on May 14th, ASX actually gained 1.43% on the following trading day.
While the market 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 close-by swing high at 5610.80 where further buy stops could get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Down Close Near Low of Period" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for ASX 200. Out of 518 times, ASX closed higher 55.02% 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 57.53% with an average market move of 0.10%.