BVSP closes within previous day's range after lackluster session
Bovespa Index (BVSP) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
BVSP finished the month 8.76% higher at 95055.82 after edging lower R$679.18 (-0.71%) today. Trading R$529.70 higher after the open, Bovespa was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on May 26th, BVSP actually gained 2.90% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (BVSP as at Jun 30, 2020):
Tuesday's trading range has been R$1450.83 (1.52%), that's far below the last trading month's daily average range of R$2522.29. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for BVSP. Prices continued to consolidate within a tight trading range between 93259.00 and 96260.00 where it has been caught now for the whole last trading week.
After moving higher in the previous session, the index closed lower but above the prior day's open today, forming a bearish Harami Candle. Additionally, one bearish candlestick pattern matches today's price action, the Bearish Hikkake Pattern.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the close-by swing high at 96260.00 where further buy stops might get activated. Selling could speed up should prices move below the nearby swing low at 93514.00 where further sell stops might get triggered. As prices are trading close to June's high at 97693.00, upside momentum could accelerate should the stock index mark new highs for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near low of period" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Bovespa. Out of 579 times, BVSP closed higher 54.58% 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 53.37% with an average market move of 0.33%.