KOSPI closes above its opening price after recovering from early selling pressure
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for May 25, 2020 | by Techniquant Editorial Team
KOSPI finished Monday at 1994.60 gaining ₩24.47 (1.24%). Trading up to ₩12.67 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on May 19th, KOSPI gained 0.46% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (KOSPI as at May 25, 2020):
Monday's trading range has been ₩27.06 (1.37%), that's slightly above the last trading month's daily average range of ₩25.68. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for KOSPI. Prices continued to consolidate within a tight trading range between 1961.40 and 2004.95 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
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 close-by swing high at 2004.95 where further buy stops could get activated. Selling might speed up should prices move below the nearby swing low at 1961.40 where further sell stops could get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for Korea Composite Index. Out of 587 times, KOSPI closed higher 52.98% 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 53.32% with an average market move of 0.19%.