BVSP finds support at 100-day moving average
Bovespa Index (BVSP) Technical Analysis Report for Aug 15, 2019 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BVSP ended Thursday at 99056.91 losing R$1201.09 (-1.2%). Today's close at 99056.91 marks the lowest recorded closing price since June 17th. Closing below Wednesday's low at 99955.00, Bovespa confirmed its breakout through the previous session low after trading up to R$1754.64 below it intraday.
Daily Candlestick Chart (BVSP as at Aug 15, 2019):
Thursday's trading range has been R$2814.05 (2.81%), that's far above the last trading month's daily average range of R$1746.95. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BVSP.
After trading as low as 98200.36 during the day, the market found support at the 100-day moving average at 98246.73. Prices broke below the key technical support level at 99630.00 (now R1), which is likely to act as resistance going forward. The last time this happened on Monday, BVSP actually gained 1.36% on the following trading day.
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 might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 102570.55.
Although 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.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 100" stand out. Its common bullish interpretation has been confirmed for Bovespa. Out of 23 times, BVSP closed higher 60.87% 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 two trading days, showing a win rate of 52.17% with an average market move of 0.33%.