Technical Analysis – Twitter stock aggressively drops past 200-day MA

Anthony Charalambous, XM Investment Research Desk

Twitter stock lost significant ground, gapping below the 200-day simple moving average (SMA) on October 24. The stock is holding its bearish demeanor as the 50-day SMA nears a bearish cross of the 200-day SMA, which would further back the negative picture. The ADX also confirms that a strong negative trend is in place.

However, the short-term oscillators reflect some weakness in negative momentum and may warn of an approaching pullback. The MACD, is still deep in the negative zone but has risen above its red trigger line, while the RSI is in the oversold territory, pointing up as it nears the 30 mark.

With all SMAs still supporting the negative sentiment, if sellers manage to steer below 28.60, the nearby support of 27.88 could hinder further declines towards the ten-and-a-half month low of 26.22 if breached as well. If sellers overcome this too, the 25.25 support could next attract attention.

To the upside, if buyers manage to reverse the price back up, initial resistance could come from the 20-day SMA at 30.44 ahead of the 31.70 barrier. Moving higher, a break above the 32.66 level, which is the 23.6% Fibonacci retracement of the down leg from 45.81 to 28.60 could hinder further gains towards the 34.00 obstacle. If overtaken, the bulls could then be challenged near the 36.70 obstacle, where the 200- and 50-day SMAs are located.

In brief, the short-term bias is bearish and a break below 26.22 would reinforce it. Yet, if the price were to shift above the 34.00 level, this could turn the bias neutral.