DJT stuck within tight trading range
Dow Jones Transportation Average Index (DJT) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
DJT ended the week 9.14% higher at 8470.09 after edging higher $17.24 (0.2%) today ahead of tomorrow's Memorial Day market holiday. Trading up to $90.03 lower after the open, Dow Trans. managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (DJT as at May 22, 2020):
Friday's trading range has been $121.86 (1.44%), that's far below the last trading month's daily average range of $196.75. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DJT. Prices continued to consolidate within a tight trading range between 8374.91 and 8594.50 where it has been caught now for the last three trading days.
Four candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern, two bearish patterns, the Hanging Man and the Northern Doji and one neutral pattern, the Doji.
After trading down to 8374.91 earlier during the day, the index bounced off the key technical support level at 8425.45 (S1). The failure to close below the support might increase that levels importance as support going forward. The stock index found buyers again today around 8374.91 for the third trading day in a row after having found demand at 8401.20 in the prior session and at 8380.96 two days ago. The last time this happened on March 11th, DJT actually lost -10.67% on the following trading day.
Though 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 8594.50 where further buy stops might get activated. Further buying could move prices higher should the market test April's close-by high at 8697.49.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous two Lows" stand out. Its common bullish interpretation has been confirmed for Dow Trans.. Out of 63 times, DJT closed higher 53.97% 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 74.60% with an average market move of 0.49%.