TAIEX closes within prior day's range after lackluster session
Taiwan Capitalization Weighted Index (TAIEX) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
TAIEX ended the month 8.98% higher at 12664.80 after losing $58.12 (-0.46%) today. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (TAIEX as at Jul 31, 2020):
Friday's trading range has been $97.77 (0.77%), that's below the last trading month's daily average range of $160.18. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for TAIEX.
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, two candlestick patterns are matching today's price action, the Bullish Spinning Top which is known as bullish pattern and one bearish pattern, the Shooting Star. The last time a Shooting Star showed up on Wednesday, TAIEX actually gained 1.45% on the following trading day.
Prices are trading close to the key technical resistance level at 12769.47 (R1). After having been unable to move lower than 12616.83 in the prior session, the index found buyers again around the same price level today at 12635.71.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 12323.76.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 12769.47 where further buy stops could get triggered. Selling might speed up should prices move below the nearby swing low at 12488.01 where further sell stops could get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Shooting Star" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Taiwan Index. Out of 40 times, TAIEX closed higher 70.00% 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 55.00% with an average market move of 0.66%.