TAIEX breaks below Wednesday's low
Taiwan Capitalization Weighted Index (TAIEX) Technical Analysis Report for Sep 17, 2020 | by Techniquant Editorial Team
TAIEX finished Thursday at 12872.74 losing $104.02 (-0.8%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Wednesday's low at 12948.72, the index confirmed its breakout through the prior session low after trading up to $97.20 below it intraday.
Daily Candlestick Chart (TAIEX as at Sep 17, 2020):
Thursday's trading range has been $138.29 (1.06%), that's slightly above the last trading month's daily average range of $125.22. 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 TAIEX.
Even with a strong opening the stock index closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns.
Prices broke below the key technical support level at 12960.68 (now R1), which is likely to act as resistance going forward. The last time this happened on March 12th, TAIEX lost -2.82% on the following trading day.
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 12724.35.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might speed up should prices move above the close-by swing high at 13021.68 where further buy stops could get activated. With prices trading close to this year's high at 13031.70, upside momentum might accelerate should the market be able to break out to new highs for the year.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Taiwan Index. Out of 52 times, TAIEX closed higher 61.54% 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 two trading days, showing a win rate of 57.69% with an average market move of -0.01%.