RTY dominated by bears dragging the market lower throughout the day
Russell 2000 Index (RTY) Technical Analysis Report for Sep 21, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, RTY ended Monday at 1485.25 tanking $51.53 (-3.35%). This is the biggest single-day loss in over three months. The last time we've seen such an unusually strong single-day loss on September 8th, RTY actually gained 1.45% on the following trading day. Today's close at 1485.25 marks the lowest recorded closing price since July 31st. The bears were in full control today, moving the market lower throughout the whole session. Closing below Friday's low at 1519.76, the index confirmed its breakout through the prior session low after trading up to $49.32 below it intraday.
Daily Candlestick Chart (RTY as at Sep 21, 2020):
Monday's trading range has been $63.48 (4.14%), that's far above the last trading month's daily average range of $29.89. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for RTY.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 1457.62 (S1). The Russell closed back below the 50-day moving average at 1527.95 for the first time since September 11th.
Crossing below the lower Bollinger Band for the first time since September 11th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 1544.18 or signal the beginning of a strong momentum breakout leading to even lower prices.
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.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 50" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Russell 2000. Out of 94 times, RTY closed higher 55.32% 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 64.89% with an average market move of 1.21%.