TWO misses to close above 20-day moving average
Two Harbors Investment Corp (TWO) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
TWO ended Wednesday at 5.39 surging $0.17 (3.26%) on high volume, significantly outperforming the S&P 500 (-0.46%). Closing above Tuesday's high at 5.35, the stock confirmed its breakout through the prior session high after trading up to $0.13 above it intraday.
Daily Candlestick Chart (TWO as at Sep 16, 2020):
Wednesday's trading range has been $0.28 (5.32%), that's far above the last trading month's daily average range of $0.18. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for TWO.
One bullish candlestick pattern matches today's price action, the Tweezer Bottom.
The share managed to close back above the 50-day moving average at 5.37 for the first time since September 3rd. When this moving average was crossed above the last time on August 7th, TWO gained 5.82% on the following trading day. After spiking up to 5.48 during the day, Two Harbors found resistance at the 20-day moving average at 5.42. After having been unable to move lower than 5.20 in the previous session, the market found buyers again around the same price level today at 5.20.
Although TWO is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to September's high at 5.54, upside momentum might speed up should the stock mark new highs for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Bounce off SMA 20" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Two Harbors. Out of 66 times, TWO closed higher 60.61% 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 53.03% with an average market move of -0.02%.