JSE40 stuck within tight trading range
JSE Top 40 USD Net Index (JSE40) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
JSE40 ended the month 9.21% higher at 3099.31 after edging lower $2.26 (-0.07%) today. Trading $29.28 higher after the open, JSE was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (JSE40 as at Jun 30, 2020):
Tuesday's trading range has been $50.22 (1.62%), that's far below the last trading month's daily average range of $88.71. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for JSE40. Prices continued to consolidate within a tight trading range between 3058.46 and 3146.22 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Northern Doji which is known as bearish pattern and one neutral pattern, the Doji. The last time a Doji showed up on June 4th, JSE40 gained 2.80% on the following trading day.
Unable to break through the key technical resistance level at 3128.75 (R1), the index closed below it after spiking up to 3130.25 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. After having been unable to move above 3119.10 in the prior session, JSE 40 ran into sellers again around the same price level today, failing to move higher than 3130.25.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might speed up should prices move above the nearby swing high at 3146.22 where further buy stops could get triggered. Selling might accelerate should prices move below the close-by swing low at 3058.46 where further sell stops could get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Northern Doji" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for JSE 40. Out of 20 times, JSE40 closed higher 75.00% 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 eight trading days, showing a win rate of 65.00% with an average market move of 0.70%.