DJU breaks back above 50-day moving average
Dow Jones Utility Average Index (DJU) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
DJU ended the week 2.61% higher at 763.93 after gaining $9.91 (1.31%) today ahead of tomorrow's Memorial Day market holiday. The bulls were in full control today, moving the market higher throughout the whole session. 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 (DJU as at May 22, 2020):
Friday's trading range has been $13.21 (1.75%), that's below the last trading month's daily average range of $16.58. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DJU. Prices continued to consolidate within a tight trading range between 751.07 and 777.39 where it has been caught now for the whole last trading week.
Notwithstanding a weak opening the market managed to close above the prior day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
The stock index managed to close back above the 50-day moving average at 758.73. When this moving average was crossed above the last time on Monday, DJU actually lost -1.52% on the following trading day. Prices are trading close to the key technical resistance level at 771.55 (R1). After having been unable to move lower than 752.10 in the previous session, the index found buyers again around the same price level today at 751.07.
Dow Util. shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying could accelerate should prices move above the close-by swing high at 772.01 where further buy stops might get activated. As prices are trading close to May's high at 783.13, upside momentum could speed up should DJU mark new highs for the month.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 50" stand out. Its common bullish interpretation has been confirmed for Dow Util.. Out of 100 times, DJU closed higher 58.00% 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 64.00% with an average market move of 0.12%.