BVSP runs into sellers again around 96803.73
Bovespa Index (BVSP) Technical Analysis Report for Feb 13, 2019 | by Techniquant Editorial Team
BVSP finished Wednesday at 95657.88 losing R$510.12 (-0.53%). Trading R$634.95 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. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (BVSP as at Feb 13, 2019):
Wednesday's trading range has been R$1414.80 (1.47%), that's slightly below the last trading month's daily average range of R$1643.24. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly lower than usual for BVSP.
Prices are trading close to the key technical support level at 94695.00 (S1). Bovespa closed back below the 20-day moving average at 96102.34. After having been unable to move above 96571.00 in the prior session, the index ran into sellers again around the same price level today, missing to move higher than 96803.73. The last time this happened on Monday, BVSP actually gained 1.86% on the following trading day.
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.
Among the five 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 Bovespa. Out of 549 times, BVSP closed higher 54.83% 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 53.73% with an average market move of 0.43%.