KOSPI dominated by bears dragging the market lower throughout the day
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
KOSPI finished the week 2.22% higher at 1970.13 after losing ₩28.18 (-1.41%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 1993.00, the index confirmed its breakout through the prior session low after trading up to ₩31.60 below it intraday.
Daily Candlestick Chart (KOSPI as at May 22, 2020):
Friday's trading range has been ₩41.25 (2.06%), that's far above the last trading month's daily average range of ₩26.98. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for KOSPI.
One bearish candlestick pattern matches today's price action, the Black Candle.
After having been unable to move above 2004.95 in the previous session, Korea Composite Index ran into sellers again around the same price level today, failing to move higher than 2002.65. The last time this happened on May 13th, KOSPI lost -0.80% on the following trading day.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 1936.44.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying might accelerate should prices move above the nearby swing high at 2004.95 where further buy stops could get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the upper Bollinger Band" stand out. Its common bearish interpretation has been confirmed for Korea Composite Index. Out of 60 times, KOSPI closed lower 56.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 55.00% with an average market move of -0.50%.