KOSPI dominated by bears dragging the market lower throughout the day
Korea Composite Stock Price Index (KOSPI) Technical Analysis Report for Jul 01, 2020 | by Techniquant Editorial Team
KOSPI ended Wednesday at 2106.70 losing ₩1.63 (-0.08%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 2108.26, the market confirmed its breakout through the previous session low after trading up to ₩6.93 below it intraday.
Daily Candlestick Chart (KOSPI as at Jul 01, 2020):
Wednesday's trading range has been ₩32.22 (1.51%), that's below the last trading month's daily average range of ₩41.89. Weekly volatility is also lower, being 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 Last Engulfing Bottom Pattern which is known as bullish pattern and one bearish pattern, the Black Candle. The last time a Last Engulfing Bottom Pattern showed up on March 18th, KOSPI actually lost -8.39% on the following trading day.
Prices are trading close to the key technical resistance level at 2112.37 (R1). After having been unable to move above 2134.38 in the prior session, the stock index ran into sellers again around the same price level today, failing to move higher than 2133.55.
The index shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the close-by swing high at 2134.38 where further buy stops could get activated. Selling might speed up should prices move below the nearby swing low at 2087.84 where further sell stops could get triggered. Further selling might move prices lower should the market test June's close-by low at 2030.82.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Last Engulfing Bottom Pattern" stand out. Its common bullish interpretation has been confirmed for Korea Composite Index. Out of 53 times, KOSPI closed higher 52.83% 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 64.15% with an average market move of 0.55%.