N100 breaks below Thursday's low
Euronext 100 (N100) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, N100 ended the month -2.28% lower at 954.26 after losing €11.82 (-1.22%) today. Today's close at 954.26 marks the lowest recorded closing price since June 15th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 956.22, Euronext confirmed its breakout through the prior session low after trading up to €1.96 below it intraday.
Daily Candlestick Chart (N100 as at Jul 31, 2020):
Friday's trading range has been €22.31 (2.3%), that's far above the last trading month's daily average range of €13.29. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for N100.
Two candlestick patterns are matching today's price action, the Bearish Closing Marubozu and the Black Candle which are both known as bearish patterns.
Prices broke below the key technical support level at 963.71 (now R1), which is likely to act as resistance going forward. The last time this happened on July 9th, N100 actually gained 0.85% on the following trading day. After having been unable to move lower than 956.22 in the previous session, the index found buyers again around the same price level today at 954.26.
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 although might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 996.05.
While the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Further selling could move prices lower should the market test June's close-by low at 926.94.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Euronext. Out of 160 times, N100 closed higher 56.25% 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 63.75% with an average market move of 0.59%.
With four out of the other five Major European Indices closing lower today, the ones that stand out on the negative side are BEL20 losing -2.01% and FTSE closing -1.54% lower. On the flipside the best performer has been TECDAX closing 0.42% higher. Read more