NKY finds buyers at key support level
Nikkei 225 Index (NKY) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, NKY finished the week 1.75% higher at 20388.16 after losing ¥164.15 (-0.8%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 20503.87, the stock index confirmed its breakout through the previous session low after trading up to ¥168.88 below it intraday.
Daily Candlestick Chart (NKY as at May 22, 2020):
Friday's trading range has been ¥280.13 (1.36%), that's slightly above the last trading month's daily average range of ¥269.94. 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 lower than usual for NKY.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 20334.99 earlier during the day, the Nikkei bounced off the key technical support level at 20365.89 (S1). The failure to close below the support could increase that levels importance as support going forward. When prices bounced off a significant support level the last time on May 12th, NKY actually lost -0.49% on the following trading day.
While the index is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 20734.91 where further buy stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Nikkei 225. Out of 308 times, NKY closed higher 57.79% 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 65.26% with an average market move of 0.79%.
With three of the other Major World Indices closing higher and three closing lower today, the winners of the day are NDX surging 0.38% and SPX gaining 0.24%. On the flipside the worst performers have been HSI closing -5.56% lower and FTSE losing -0.37%. Read more