MERV falls to lowest close since December 20, 2019
MERVAL Index (MERV) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MERV ended the week -6.23% lower at 38647.68 after edging lower $21.78 (-0.06%) today. Today's close at 38647.68 marks the lowest recorded closing price since December 20, 2019. Trading $459.70 higher after the open, MERVAL 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 failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (MERV as at Feb 14, 2020):
Friday's trading range has been $1067.97 (2.76%), that's slightly below the last trading month's daily average range of $1224.68. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MERV.
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, five candlestick patterns are matching today's price action, the Bullish Harami Cross Pattern and the Southern Doji which are both known as bullish patterns and three neutral patterns, the Doji, the Long-Legged Doji and the Rickshaw-Man. The last time a Southern Doji showed up on August 22, 2019, MERV actually lost -4.99% on the following trading day.
After having been unable to move lower than 37967.97 in the prior session, the market found buyers again around the same price level today at 38061.19.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 40625.23.
Although the index is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Selling could accelerate should prices move below the close-by swing low at 37967.97 where further sell stops might get triggered.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Rickshaw-Man" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for MERVAL. Out of 8 times, MERV closed higher 62.50% 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 87.50% with an average market move of 3.20%.