DJIA still stuck within tight trading range
Dow Jones Industrial Average Index (DJIA) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, DJIA ended the week 3.29% higher at 24465.16 after edging lower $8.96 (-0.04%) today ahead of tomorrow's Memorial Day market holiday. Trading up to $167.91 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. 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 (DJIA as at May 22, 2020):
Friday's trading range has been $187.57 (0.77%), that's far below the last trading month's daily average range of $409.37. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DJIA. Prices continued to consolidate within a tight trading range between 24059.98 and 24718.46 where it has been caught now for the whole last trading week.
Three candlestick patterns are matching today's price action, the Hanging Man and the Northern Doji which are both known as bearish patterns and one neutral pattern, the Doji. The last time a Doji showed up on April 16th, DJIA gained 2.99% on the following trading day.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could speed up should prices move above the nearby swing high at 24718.46 where further buy stops might get activated. Further buying could move prices higher should the market test April's close-by high at 24764.77.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Dow Indu.. Out of 284 times, DJIA closed higher 60.21% 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 61.97% with an average market move of 0.50%.
With three of the other Major World Indices closing higher and three closing lower today, the winners of the day are NDX surging 0.38% and SPX gaining 0.24%. On the flipside the worst performers have been HSI closing -5.56% lower and NKY losing -0.8%. Read more