Has TWTR Stock Finally Bottomed?
As a trader, I have been using the “Twitter” app for some time. I use the app to follow certain traders and news sources and, I must say, I really love Twitter and I would be quite sad if the service was no longer available. At times, my fear surrounding their livelihood grows as its share price continues to meander lower. Since peaking in 2013, Twitter Inc (NASDAQ:TWTR) stock is currently down 75%. This type of performance leaves little for appreciation.
I am focusing on the TWTR stock chart because, as my fears grow regarding their service, I look to the charts as a leading indicator. If I can find patterns alluding to a positive development, then perhaps my fears are unfounded and Twitter may indeed have a prosperous life.
Recent developments have offered some good news to calm some of my fears surrounding Twitter stock. The good news comes in the form of a few constructive chart patterns, and in signals that may be suggesting a possible turnaround.
The following chart illustrates some of those positive developments.
Chart courtesy of StockCharts.com
The chart above has two distinctive chart patterns that may provide some insights.
The first pattern is a break of the downtrend line. Before I get too excited, it is worth noting that the share prices have yet to make a higher high, but the break of trend suggests that the path of least resistance is no longer lower.
The second pattern alludes to a possible trend reversal. Twitter stock could be going into a double bottom pattern. A double bottom is a trend reversal pattern that constitutes two consecutive bottoms that are separated by one peak in between. The pattern is confirmed when shares close above the peak that separates the bottoms.
TWTR stock would need to close above $20.00 on a sustained basis to confirm a trend reversal. This would be tremendous news for the bulls.
The following chart illustrates further positive developments.
Chart courtesy of StockCharts.com
The chart above has two distinct features that add further fuel to the bullish case. These key points that I will address involve the 200-day moving average, and moving average crosses.
The 200-day moving average is the dividing line between stocks trading in a bull market and stocks trading in a bear market. When the share price is above the moving average, it is bullish; when the share price is below the moving average, it is bearish.
There are two distinct moving average crosses: a golden cross and a death cross. These indicators are executed when the faster-moving 50-day moving average crosses the slower-moving 200-day moving average. A golden cross is executed when the faster-moving average crosses above the slower-moving average. Traders use this signal to confirm that a bull market is on the horizon. A death cross is the exact opposite, and signals that a bear market is on the horizon.
In April 2015, the share price gapped below the 200-day moving average and, shortly afterwards, a death cross confirmed the bearish premise. The share price proceeded to fall precipitously.
These same signals are now starting to reverse. Twitter stock broke above the 200-day moving average in August 2016, and it is currently trading above that level. This has caused the moving averages to converge. It is quite possible that a golden cross will execute if TWTR stock can remain above the 200-day moving average.
The Bottom Line on TWTR Stock
TWTR stock has reached that defining moment where a trend reversal can occur. A sustained close above $20.00 will confirm a trend reversal and would generate a golden cross that would confirm the bullish premise. The charts have left me keen about the future prospects of Twitter, and I am awaiting a bullish outcome.
Twitter stock is a speculative play that needs a reversal for the bulls to rejoice, but it is not the only play in the tech space. My colleague has just released a fascinating report: “Big Tech Stocks Poised for More Growth.” Click HERE for your free report.