TXT finds buyers at key support level
Textron Inc. (TXT) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, TXT finished the week 11.2% higher at 26.91 after edging lower $0.04 (-0.15%) today on low volume, slightly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday.
Daily Candlestick Chart (TXT as at May 22, 2020):
Friday's trading range has been $0.93 (3.4%), that's below the last trading month's daily average range of $1.40. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for TXT.
Regardless of a strong opening the stock closed below the prior day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on April 24th, TXT actually gained 4.18% on the following trading day.
After trading down to 26.42 earlier during the day, Textron bounced off the key technical support level at 26.66 (S1). The failure to close below the support could increase that levels significance as support going forward.
The share shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the close-by swing high at 27.75 where further buy stops could get triggered.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Textron. Out of 314 times, TXT closed higher 55.10% 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 57.01% with an average market move of 0.35%.