SWN still stuck within tight trading range
Southwestern Energy Company (SWN) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
SWN ended the week 7.41% higher at 2.90 after losing $0.05 (-1.69%) today on low volume, notably underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Trading up to $0.07 lower after the open, Southwestern Energy 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 (SWN as at May 22, 2020):
Friday's trading range has been $0.12 (4.15%), that's far below the last trading month's daily average range of $0.25. 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 SWN. Prices continued to consolidate within a tight trading range between 2.80 and 3.13 where it has been caught now for the whole last trading week.
One bullish candlestick pattern matches today's price action, the Bullish Spinning Top. The last time a Bullish Spinning Top showed up on May 7th, SWN gained 10.73% on the following trading day.
After trading down to 2.82 earlier during the day, the market bounced off the key technical support level at 2.88 (S1). The failure to close below the support could increase that levels significance as support going forward. The stock found buyers again today around 2.82 for the third trading day in a row after having found demand at 2.82 in the previous session and at 2.82 two days ago.
Though the share is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the close-by swing high at 3.13 where further buy stops might get activated. With prices trading close to this year's high at 3.39, upside momentum could accelerate should SWN be able to break out to new highs for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior two Lows" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for Southwestern Energy. Out of 118 times, SWN closed lower 55.93% 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 57.63% with an average market move of -1.12%.