MDAX slips to lowest close since July 1st
MDAX Performance-Index (MDAX) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MDAX finished the month 1.36% higher at 26191.82 after losing €73.60 (-0.28%) today. Today's close at 26191.82 marks the lowest recorded closing price since July 1st. Trading €299.78 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Monday, MDAX actually gained 0.51% on the following trading day. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (MDAX as at Jul 31, 2020):
Friday's trading range has been €403.11 (1.53%), that's slightly above the last trading month's daily average range of €344.91. 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 MDAX.
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.
Prices are trading close to the key technical support level at 26007.18 (S1).
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 26853.35.
Although the stock index is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 26007.18 where further sell stops could get activated. As prices are trading close to July's low at 25539.06, downside momentum might accelerate should the index mark new lows for the month.
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 MDAX. Out of 557 times, MDAX closed higher 55.66% 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 62.12% with an average market move of 0.87%.
With two out of the other three German Stock Indices closing higher today, the ones that stand out on the positive side are SDAX gaining 0.84% and TECDAX closing 0.42% higher. On the flipside the worst performer has been DAX closing -0.54% lower. Read more