MERV unable to break through key resistance level
MERVAL Index (MERV) Technical Analysis Report for Dec 07, 2018 | by Techniquant Editorial Team
MERV finished the week 0.2% higher at 31546.05 after losing $473.79 (-1.48%) today. Trading $357.98 higher after the open, the stock index was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (MERV as at Dec 07, 2018):
Friday's trading range has been $1006.54 (3.14%), that's slightly above the last trading month's daily average range of $914.85. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MERV.
Even with a strong opening MERVAL closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on November 20th, MERV actually gained 1.85% on the following trading day.
Prices are trading close to the key technical support level at 31075.43 (S1). Unable to break through the key technical resistance level at 32301.74 (R1), the index closed below it after spiking up to 32446.86 earlier during the day. The failure to close above the resistance might increase that levels importance going forward.
The market shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling could speed up should prices move below the close-by swing low at 31075.43 where further sell stops might get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for MERVAL. Out of 478 times, MERV closed higher 54.39% 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 56.69% with an average market move of 1.33%.