Twitter, Inc. (TWTR) stock exploded higher on heavy volume in Wednesday’s session, gaining more than 7% after reports that the social media portal is working on a subscription service. The company did not confirm or deny the initiative, but the players in the market jumped on anyway, lifting the stock to a five-week high, which opens the way to a greater increase in the next few weeks. It is even possible that the increase will be the next wave in an uptrend that ends a long period of delinquent behavior.
The stock is currently consolidating its gains on Thursday after two Congressional Republicans renewed criticism that Twitter as to the content of the moderation was unbalanced, leaning to the left while stifling the conservative voice. They have re-emphasized the company’s new fact-checking mechanism, which has marked several presidential tweets. Trump has threatened to use the power of his office to regulate the social media, but there has been little follow-up of the Oval Office in recent weeks.
Wall Street consensus was warned on Twitter stock in recent months, with the 5 “Buy”, 19 “Hold” and 3 “Sell” ratings. The subscription service, if confirmed, is likely to raise a number of Hold ratings Buy of the column, the addition of a stiff tailwind for this week’s rally momentum. Price targets currently range from a low of $23 to a Street high of$ 42, while Twitter stock is currently trading about $5 above the median of $31 target.
TWTR Long-Term Chart (2013 – 2020)
The creation of the public company in the middle of$40 in November 2013 and is entered a brief of the upward trend, which has posted a record high of $70.43 in December. The drop sliced through the ipo of the opening of print in March 2014, strengthening the level of resistance that is still in the game for more than six years later. The first wave of sales found support in the upper $20 in May, setting the stage for a resumption of the wave that has landed in the bottom of $50 in the fourth quarter.
The price action has held the 2014 down to a 2015 breakdown that led to the aggressive selling pressure. The buyers have emerged near $14 in February 2016, but the increase of the failure quickly, which gives a decline that has affected the state of the low by a penny in May. It tested this level a third time in the second quarter of 2017, completing a triple bottom, which gave the most prolific of purchasing power since the stock came public. The rally ended less than three points above the ipo opening print in June 2018, leaving the place to a proportional retracement that found support in the middle of$20 in October.
The bulls lifted the reserve in the $40 in 2019, but the rally came up short once more, the inversion in the same level of resistance. He then widened the gap to two legs down, with 2020 in the event of a pandemic-driven sales dumping Twitter to a 16-month low to$ 20. It will now take a rally up to $40 at the end of the string of lower highs in place since 2018. In the Long term, the resistance goes perfectly with the 50% sale retracement level, highlighting an obstacle that must be overcome to yield a sustained bullish trend. The next test, if it comes, will be more difficult than usual because the trend line of lower highs has also aligned at this price level.
TWTR Short-Term Chart (2018 – 2020)
In February, unfilled gap between $36.30 and $38 is the next short-term hurdle, perfectly aligned to the .618 Fibonacci sale retracement level. Fortunately for the bulls, the balance volume (OBV), the accumulation-distribution indicator is at the head of the action of increasing prices, the lifting of all time this week. In turn, it predicts that prices will follow soon, increasing the probability that the stock will find its way back in the mid – $40.
The Bottom Line
Twitter stock posted posted the biggest volume day of the rally since the month of June, 2018, on Wednesday, to lift shareholder spirits, while increasing the probability that the stock will test the critical resistance at the mid-$40.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.