RWM unable to break through key resistance level
ProShares Short Russell2000 (RWM) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, RWM ended the week -7.76% lower at 39.23 after edging lower $0.18 (-0.46%) today ahead of tomorrow's Memorial Day market holiday. Today's close at 39.23 marks the lowest recorded closing price since February 25th. Trading $0.47 higher after the open, the ETF was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (RWM as at May 22, 2020):
Friday's trading range has been $0.59 (1.5%), that's far below the last trading month's daily average range of $1.21. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for RWM. Prices continued to consolidate within a tight trading range between 39.19 and 40.00 where it has been caught now for the last three trading days.
One bullish candlestick pattern matches today's price action, the Tweezer Bottom.
Unable to break through the key technical resistance level at 39.52 (R1), the market closed below it after spiking up to 39.78 earlier during the day. The failure to close above the resistance might increase that levels importance going forward. ProShares Short found buyers again today around 39.19 for the third trading day in a row after having found demand at 39.19 in the previous session and at 39.21 two days ago. The last time this happened on May 12th, RWM gained 3.36% on the following trading day.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
With prices trading close to this year's low at 35.94, downside momentum could speed up should RWM break out to new lows for the year. Further selling might move prices lower should the market test April's nearby low at 39.14.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Tweezer Bottom" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for ProShares Short. Out of 40 times, RWM closed lower 65.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 57.50% with an average market move of -0.48%.