KOSPI closes below its opening price unable to hold early session gains
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
KOSPI finished the month 3.88% higher at 2108.33 after gaining ₩14.85 (0.71%) today. Trading ₩10.00 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (KOSPI as at Jun 30, 2020):
Tuesday's trading range has been ₩26.12 (1.23%), that's below the last trading month's daily average range of ₩42.72. 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 KOSPI.
Two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns. The last time a Bearish Short Candle showed up on April 24th, KOSPI actually gained 1.79% on the following trading day.
Prices are trading close to the key technical resistance level at 2112.37 (R1).
Korea Composite Index shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling could speed up should prices move below the close-by swing low at 2087.84 where further sell stops might get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Korea Composite Index. Out of 68 times, KOSPI closed higher 57.35% 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 70.59% with an average market move of 1.06%.