Twitter Inc: If TWTR Stock Can Do THIS, It Will Launch
TWTR Stock: Breakout Imminent
I have been a long-time user of Twitter because I love their service. So it saddens me deeply to see its share price dwindle. My feelings are that, as Twitter Inc (NYSE:TWTR) stock drops, the future of this company is in question. I assume that the stock market is nothing more than just a voting machine, and the public decides with their hard-earned dollars what the valuation of a company is based on. Lower prices equate to problems with the business model, and bankruptcy is a possibility if the shares continue to slide.
Shares have slid to a fraction of what they were trading at, but the TWTR stock chart has given me some reason to be optimistic. If my analysis is correct, then my original worries are not warranted. The following Twitter stock charts will help me illustrate where my newfound optimism stems from.
Chart courtesy of StockCharts.com
The downtrend that has developed began in the middle of 2015 and has effectively decimated Twitter stock. This downtrend line (highlighted in blue) is created by connecting the peaks on a price chart. A downtrend is defined by lower lows, and is confirmed by lower highs. Downtrends can easily be identified as the price moves from the upper left to the lower right. This is the definition of bearish price action.
In June 2015, there was glimmer of hope as this infamous downtrend was finally broken. At minimum, this event suggests that the trend toward lower prices has halted for the time being. The share price is now having problems conquering the $20.00-$21.00 price point. Numerous attempts to trade above this level have failed, and $20.00-$21.00 has now become a serious level of resistance (highlighted in pink) that needs to be contended with. The good new is that this ceiling is not made of concrete and, with enough buying pressure, the bulls can prevail.
The following chart illustrates another positive development in Twitter stock that may muster enough bullish support to break resistance.
Chart courtesy of StockCharts.com
In early September, TWTR stock generated a golden cross. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. Traders use this signal to confirm that a bull market is on the horizon. It is wise to trade in the direction of this signal. A trader’s position should either be long or neutral.
This signal acted to reaffirm the the break of the downtrend and creates a bullish tailwind that may produce the break above resistance that all the bulls are anticipating.
The line highlighted in dark blue represents the a new uptrend line that has supported the share price after the downtrend was broken. In order for this position to remain bullish, the trend line need to stay intact.
The following TWTR stock chart illustrates the constructive price action after the downtrend was broken.
Chart courtesy of StockCharts.com
Bullish price action is described as impulse waves that surge higher and consolidation waves where prices temporarily pause. On the chart above, the impulse wave is highlighted in green, and the consolidations wave is highlighted in purple. When the consolidation wave is complete, in order to remain bullish, a new impulse wave should develop. This impulse wave should challenge and possibly break above the level of resistance that has has stood so stubbornly.
There are two trend lines highlighted in blue that contain the recent bullish price action. One is marked “Support” and the other is marked “Resistance.” These trend lines are effectively creating a channel that the price will oscillate within.
It seems as though Twitter stock is now once again attempting to break above resistance. If TWTR stock is going to break above $20.00-$21.00 on a sustained basis, I expect some sort of explosive price action to confirm this move.
The Bottom Line on Twitter Stock
Twitter stock is now at a major inflection point. Technical signals based on the price charts are suggesting that a test of resistance is at hand and that the odds of a break of resistance are increasing. A break above resistance would confirm that a trend reversal is in play and that a new bull market has begun in TWTR stock.
