TWM breaks below key technical support level
ProShares UltraShort Russell2000 (TWM) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, TWM ended the month -10.77% lower at 10.36 after losing $0.27 (-2.54%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 10.54, the market confirmed its breakout through the previous session low after trading up to $0.24 below it intraday.
Daily Candlestick Chart (TWM as at Jun 30, 2020):
Tuesday's trading range has been $0.45 (4.19%), that's below the last trading month's daily average range of $0.62. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for TWM.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 10.45 (now R1), which is likely to act as resistance going forward. The last time this happened on April 27th, TWM lost -3.02% on the following trading day.
Although the ETF is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Selling might speed up should prices move below the nearby swing low at 10.25 where further sell stops could get activated. With prices trading close to this year's low at 9.44, downside momentum might accelerate should ProShares UltraShort break out to new lows for the year.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Price broke through Technical Support S1" stand out. Its common bearish interpretation has been confirmed for ProShares UltraShort. Out of 241 times, TWM closed lower 55.19% 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 65.98% with an average market move of -1.35%.