DJU breaks below key technical support level
Dow Jones Utility Average Index (DJU) Technical Analysis Report for Apr 22, 2019 | by Techniquant Editorial Team
DJU finished Monday at 770.94 losing $1.19 (-0.15%). Trading $2.12 higher after the open, the stock index was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Thursday's low at 771.20, Dow Util. confirmed its breakout through the prior session low after trading up to $1.64 below it intraday.
Daily Candlestick Chart (DJU as at Apr 22, 2019):
Monday's trading range has been $4.23 (0.55%), that's far below the last trading month's daily average range of $7.77. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for DJU.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on March 25th, DJU actually gained 0.70% on the following trading day.
Prices broke below the key technical support level at 771.51 (now R1), which is likely to act as resistance going forward.
Though the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 776.98 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 769.37 where further sell stops might get activated. As prices are trading close to April's low at 769.03, downside momentum could speed up should the index mark new lows for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Spinning Top" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Dow Util.. Out of 166 times, DJU closed higher 61.45% 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 68.07% with an average market move of 0.98%.