ETN finds buyers at key support level
Eaton Corporation PLC (ETN) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, ETN finished Thursday at 78.25 gaining $3.65 (4.89%) on low volume, strongly underperforming the S&P 500 (6.24%). Trading up to $2.47 lower after the open, the share managed to reverse during the session as bulls took control ending the day above 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 (ETN as at Mar 26, 2020):
Thursday's trading range has been $5.14 (6.74%), that's below the last trading month's daily average range of $6.81. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for ETN.
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.
After trading down to 73.82 earlier during the day, the stock bounced off the key technical support level at 73.86 (S1). The failure to close below the support could increase that levels importance as support going forward. After having been unable to move above 79.31 in the prior session, Eaton ran into sellers again around the same price level today, failing to move higher than 78.96. The last time this happened on March 20th, ETN lost -11.03% on the following trading day.
While the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 79.31 where further buy stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Eaton. Out of 427 times, ETN closed higher 56.44% 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 58.55% with an average market move of 0.66%.