KOSPI finds buyers at key support level
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for Mar 27, 2020 | by Techniquant Editorial Team
KOSPI finished the week 9.68% higher at 1717.73 after gaining ₩31.49 (1.87%) today. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (KOSPI as at Mar 27, 2020):
Friday's trading range has been ₩90.84 (5.17%), that's slightly above the last trading month's daily average range of ₩75.28. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for KOSPI. Prices continued to consolidate within a tight trading range between 1645.28 and 1759.05 where it has been caught now for the last three trading days.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar.
After trading down to 1668.21 earlier during the day, the market bounced off the key technical support level at 1680.60 (S1). The failure to close below the support could increase that levels importance as support going forward. After having been unable to move lower than 1679.23 in the previous session, the index found buyers again around the same price level today at 1668.21. The last time this happened on Monday, KOSPI gained 8.60% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Korea Composite Index. Out of 448 times, KOSPI closed higher 56.92% 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 52.23% with an average market move of 0.17%.