EWBC pushes through key technical resistance level
East West Bancorp Inc. (EWBC) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
EWBC finished Wednesday at 34.40 gaining $0.38 (1.12%) on high volume, significantly outperforming the S&P 500 (-0.46%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (EWBC as at Sep 16, 2020):
Wednesday's trading range has been $1.45 (4.28%), that's above the last trading month's daily average range of $1.17. 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 EWBC.
One bearish candlestick pattern matches today's price action, the Thrusting Pattern.
Buyers managed to take out the key technical resistance level at 34.37 (now S1), which is likely to act as support going forward.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and might now be heading back up towards the mean of the Bollinger Bands at 36.31. The last time this happened on Monday, EWBC actually lost -3.38% on the following trading day.
Although the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might accelerate should prices move above the close-by swing high at 35.59 where further buy stops could get triggered. Trading close to July's low at 32.34 we might see further downside momentum if potential sell stops at the level get activated.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Thrusting Pattern" stand out. Its common bearish interpretation has been confirmed for East West. Out of 6 times, EWBC closed lower 83.33% 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 66.67% with an average market move of -1.04%.