ASX50 closes lower for the 3rd day in a row
S&P/ASX 50 Index (ASX50) Technical Analysis Report for Jul 16, 2019 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, ASX50 ended Tuesday at 6590.50 losing $9.90 (-0.15%). Today's close at 6590.50 marks the lowest recorded closing price since June 18th. Trading $13.30 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (ASX50 as at Jul 16, 2019):
Tuesday's trading range has been $23.20 (0.35%), that's far below the last trading month's daily average range of $79.83. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly lower than usual for ASX50.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 6581.90 (S1). ASX 50 was bought again around 6590.50 after having seen lows at 6583.50, 6598.10 and 6598.10 in the last three trading sessions. Obviously there is something going on at that level.
Though the stock index is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the close-by swing high at 6650.80 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 6583.50 where further sell stops might get activated. As prices are trading close to July's low at 6553.20, downside momentum could accelerate should the index mark new lows for the month.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for ASX 50. Out of 91 times, ASX50 closed higher 59.34% 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 54.95% with an average market move of 0.34%.
Market Conditions for ASX50 as at Jul 16, 2019
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