KOSPI dominated by bears dragging the market lower throughout the day
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for May 17, 2019 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, KOSPI ended the week -2.48% lower at 2055.80 after losing ₩11.89 (-0.58%) today. Today's close at 2055.80 marks the lowest recorded closing price since January 8th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 2062.44, the index confirmed its breakout through the previous session low after trading up to ₩8.65 below it intraday.
Daily Candlestick Chart (KOSPI as at May 17, 2019):
Friday's trading range has been ₩29.04 (1.4%), that's slightly above the last trading month's daily average range of ₩27.62. Things look different on the weekly timeframe, where the market's trading range of the last week has been way below the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for KOSPI.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 2056.74 (now R1), which is likely to act as resistance going forward.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term. With its 50-day moving average crossing below its 200-day moving average, Korea Composite Index has entered a so-called "Death Cross" for the first time since April 12th. Showing increasing downward momentum in the short and medium-term the "Death Cross" is known to indicate a potential bear market on the horizon. When the last "Death Cross" happened on June 15, 2018, KOSPI lost -1.16% on the following trading day.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Down Close Near Low of Period" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Korea Composite Index. Out of 413 times, KOSPI closed higher 60.05% 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 55.21% with an average market move of 0.33%.