BVSP breaks below Thursday's low
Bovespa Index (BVSP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, BVSP finished the month 8.26% higher at 102912.24 after tanking R$2096.76 (-2.0%) today. This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 103920.00, the market confirmed its breakout through the previous session low after trading up to R$1277.96 below it intraday.
Daily Candlestick Chart (BVSP as at Jul 31, 2020):
Friday's trading range has been R$2820.09 (2.69%), that's far above the last trading month's daily average range of R$1923.90. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for BVSP.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 102114.00 (S1). The index ran into sellers again today around 105462.13 for the third trading day in a row after having found sellers at 105607.00 in the prior session and at 105704.00 two days ago. The last time this happened on July 10th, BVSP lost -1.33% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling might accelerate should prices move below the nearby swing low at 100859.00 where further sell stops could get activated.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Bovespa. Out of 318 times, BVSP closed higher 53.14% 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 56.92% with an average market move of 0.61%.