To capitalize, type out the word with the capital where you want it, then tap your creation in the predictive text bar at the top of the keyboard and it will insert.
Are you using the actual Swype keyboard? Development for that keyboard has been stopped and it's been removed from the Play Store by Dragon (which bought the company that originally developed Swype). I suggest making a move to a different keyboard while you can still fall back on Swype, I was very much a fan of that keyboard but find GBoard to be a fine replacement for it.
As for the question - try swiping up from the letter, back down then continue the word from that letter.
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