Twitter Shares Form Major Reversal Pattern

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Twitter shares could be in for more losses following the sharp decline that took place in April. The double top pattern is still visible on its daily time frame, with the stock inching close to breaking below the neckline.

Moving averages are criss-crossing back and forth, which means that investors haven’t picked a clear direction and that the range-bound action could continue. Price could still bounce off the current support area but it may have difficulty regaining ground back to the resistance at $52/share.

Stochastic is on the move down, which means that further declines are possible. RSI is indicating oversold conditions and looks ready to climb, suggesting a potential bounce.

Twitter Shares Outlook

A break below the $35/share level could lead to a move down to the support at $30.50/share. Increased selling pressure could spur a break below this area and further losses until the $25/share area.

There haven’t been much good news from the company, as its CEO Costolo recently surrendered his post and handed the reins back to founder Jack Dorsey. Costolo is set to step down by July 1 while Dorsey will replace him as interim CEO.

“The future belongs to Twitter thanks in large part to Dick Costolo’s dedication and vision,” Dorsey said.

Rumors swirled that the mounting pressure to keep Twitter at par with its competitors was too much for Costolo to handle. The company’s latest earnings report printed dismal results, revealing that the social media platform was having trouble retaining its users compared to Facebook and other social media sites.

“Unfortunately this news isn’t surprising,” Forrester analyst Nate Elliott said. “The bottom line is that Twitter isn’t very good right now at serving either its users or its marketers.”

The lack of developments or strategy from the company could lead to further weakness in Twitter shares although a new direction could allow it to erase some of its losses.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.