BEL20 closes lower for the 3rd day in a row
BEL 20 (BEL20) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, BEL20 ended the month -1.64% lower at 3273.37 after tanking €67.11 (-2.01%) today. This is the biggest single-day loss in over a month. Today's close at 3273.37 marks the lowest recorded closing price since June 11th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 3308.48, the stock index confirmed its breakout through the previous session low after trading up to €35.11 below it intraday.
Daily Candlestick Chart (BEL20 as at Jul 31, 2020):
Friday's trading range has been €76.92 (2.31%), that's above the last trading month's daily average range of €52.78. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BEL20.
Two candlestick patterns are matching today's price action, the Bearish Closing Marubozu and the Black Candle which are both known as bearish patterns. The last time a Bearish Closing Marubozu showed up on June 24th, BEL20 actually gained 1.68% on the following trading day.
Prices are trading close to the key technical support level at 3258.64 (S1).
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 could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 3449.55.
While the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test June's close-by low at 3215.29.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for BEL 20. Out of 156 times, BEL20 closed higher 53.21% 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 60.90% with an average market move of 0.67%.
With four out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are FTSE losing -1.54% and CAC closing -1.43% lower. On the flipside the best performer has been TECDAX closing 0.42% higher. Read more