MERV closes below its opening price unable to hold early session gains
MERVAL Index (MERV) Technical Analysis Report for Feb 21, 2020 | by Techniquant Editorial Team
MERV ended the week -0.12% lower at 38602.48 after losing $358.93 (-0.92%) today. Trading $456.66 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 February 14th, MERV actually gained 1.43% on the following trading day. 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 Feb 21, 2020):
Friday's trading range has been $1014.87 (2.6%), that's slightly below the last trading month's daily average range of $1145.03. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MERV. Prices continued to consolidate within a tight trading range between 37976.85 and 39418.07 where it has been caught now for the whole last trading week.
Prices are trading close to the key technical support level at 37925.30 (S1). After having been unable to move above 39266.77 in the prior session, the index ran into sellers again around the same price level today, missing to move higher than 39418.07.
Though 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 accelerate should prices move below the nearby swing low at 37976.85 where further sell stops could get triggered.
Among the five 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 MERVAL. Out of 486 times, MERV closed higher 53.50% 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 54.73% with an average market move of 1.06%.