Going Forward, Twitter Stock Is a Bull Market in Development

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iStock.com/wasan prunglampoo

TWTR Stock Is No Longer an Eyesore

I am not even going to make any remarks about the current state of the markets, because they rarely have any influence on Twitter Inc (NYSE:TWTR). The last four years are a testament to this notion, as the NASDAQ index has been forging new highs while TWTR stock has been an eyesore, lagging behind and underperforming the markets as if it was caught in a downdraft.

I find it incredibly appropriate that now, when the markets are facing a hint of turmoil, that Twitter stock has decided to wake from its slumber. TWTR shares are currently up 45.15% year-to-date, outperforming the markets by leaps and bounds.

This move toward higher Twitter stock prices has resulted in a number of technical developments, which are suggesting that this investment is not likely to be an eyesore anymore. That’s because the trends are implying that the bear market in TWTR stock has finally come to an end and that a bull market is now in development.

This notion of a bull market and a higher Twitter share price is being supported by the completion of two different and distinct technical price patterns.

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The first technical price pattern, which is highlighted on the following Twitter stock chart, suggests that the bear market that began in December 2013 has finally come to an end:

Chart courtesy of StockCharts.com

This TWTR stock chart illustrates that a large bearish trend has been in development for the better part of four years. This trend, which contains the quintessential characteristic that defines all bearish trends, consists of price action containing a sequence of lower lows and lower highs.

The downtrend line, which is highlighted on the TWTR price chart, was created by connecting the sequence of lower highs. This downtrend line had prevented all previous attempts at moving behind it. Until recently, that line was all that was standing in the way of higher stock prices.

On February 8, TWTR stock broke above the downtrend line in convincing fashion, negating all the bearish implications suggested by it. This event is implying that the bear market in Twitter stock has concluded, and that the door has swung wide open for a bull market to develop. That’s exactly the notion that the second completed technical price pattern is suggesting.

The second completed technical price pattern, which is suggesting that a new bull market is now in development, is highlighted on the following Twitter price chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the TWTR stock chart is a double bottom. A double bottom price pattern is a trend-reversal pattern that develops at the conclusion of a bearish trend. It is characterized by two distinct rounded bottoms, which are separated by a peak in between.

A trend reversal is confirmed when the stock prices close above the peak that separates these two bottoms, suggesting that a new bullish trend has begun.

Twitter stock completed this pattern on the same day it broke above the downtrend line. We know this because the resistance level outlined by the downtrend line coincided with the resistance outlined by the double bottom reversal pattern.

This event is magnified because one level of resistance was static, while the other was dynamic. The fact that the breakout occurred as the two levels were coinciding was not a coincidence, and it serves to reaffirm the significance of the event that has just unfolded.

The reaction that resulted after both of these patterns were completed is a strong indication supporting the notion that the bear market in Twitter stock is now complete, the lows have been forged, and a new bull market is now in development.

Analyst Take

A number of completed technical price patterns are suggesting that the bear market in TWTR stock has finally come to an end and that a new bull market is now in development. These completed patterns are why I can finally say, with no hesitation, that I am bullish on Twitter stock.