Twitter, Inc. (TWTR) share price has risen by more than 50% since the March low, but has now reached a resistance level, which could trigger a reversal and multi-week decline. The recovery of the wave, for the moment, at least, not to end the string of lower highs in place since the stock topped out at $45.85 in September 2019, overlooking the long-term chart resolutely bearish appearance which may indicate an uncomfortable trip back to $20.00.
CEO Jack Dorsey, has sparked a controversy last week, placing a “fact-check” filter tweets from the President Donald Trump. The commander-in-chief, responded immediately, threatening to raise the liability protection afforded to the ideally neutral social media platforms that have grown increasingly politicized in recent years. Despite the ceo’s apparently good intentions, it looks like he brought a knife to a gunfight that he can’t win in the long term.
Bottom fishers were buying Twitter stock since the month of March, the lifting of the accumulation measurement of the resistance at the February high. Indicators reversed to the barrier after the presidential threat, which suggests that many traders and investors are now cashing in their chips and return at the margin. However, it is difficult to say whether this short-term bearish activity marked the beginning of the distribution long-term or just a pause until the catfight disappears from the financial news.
TWTR Long-Term Chart (2013 – 2020)
The creation of the public company, to $45.10 in November 2013 and entered into a brief but strong upward trend a month later, lifting to a record high of $74.73 in December. It was disposed of in the second quarter of 2014, the cutting through of the ipo opening of the printing before finding support in the upper $20, and raised again above that inflection point during the summer months. The recovery of the wave is then found in a low-top, to the front of a failed April 2015 breakout attempt.
Aggressive sellers have taken control at this time, the outbreak of a July allotment, which has published a long string of low-low in May 2016 of the all-time low of $13.73. Subsequent price action has completed a triple bottom reversal in April 2017, setting the stage for a bullish trend that has taken more than 10 months, in order to generate a constant rise. The impulse purchase is completed just above the ipo opening print in June 2018, marking the highest in the past two years.
A sell-off in the fourth quarter of 2018 posted below, which gives a bounce that failed in September 2019 breakout attempt. Aggressive, the sellers took control once again, in November, when the bulls designed a modest recovery, which carved a lower high in February 2020. The stock has broken its support at the October, November, 2018, and 2019 the bottom, at the fall in March, before coming to a stop to a two-year low.
TWTR Short-Term Chart (2017 – 2020)
The slight increase in the second quarter carved a bear flag that the winding of the resistance to the 2018 and 2019 the bottom, reaching the 200-day exponential moving average (EMA), which has been broken on heavy volume in October 2019. The stock has also failed to a February breakout above the barrier, the strengthening of the resistance that will be difficult to overcome in the current environment. He has risen above the moving average of five sessions in May and the spacing of the electrodes on the decline after the Asset of the threat, increasing the chances that the rebound has come to an end.
Flag support has aligned with the 50-day EMA and the November 2019 low, the marking of a line in the sand for the bulls, because of a violation would have triggered sell signals that predict the March lows will eventually fail. The October 2018, down to $26 would then be the mark of a final floor, before a test for the bass. Given the bearish set-up, market players should keep an eye on balance volume (OBV), the accumulation-distribution indicator of the distribution in the bottom of the red line, which would confirm a significant increase of the power of sale.
The Bottom Line
Twitter stock recovery of the wave may have come to an end, setting the stage for a new decline that could test strong support.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.