Yahoo shares have been selling off since last year but is currently pulling back from the slide. Using the Fibonacci retracement tool on the latest swing high and low shows that the 38.2% level is close to an area of interest, which might hold as resistance.
Price is stalling at the 100 SMA at the moment, as this could also serve as a dynamic inflection point. A larger pullback could last until the 50% Fib, which is near the 200 SMA. The short-term SMA is below the long-term SMA for now, confirming that the downtrend is set to carry on.
Stochastic is already indicating overbought conditions but hasn’t turned lower, indicating that bullish momentum is present but weakening. Meanwhile, RSI is on the move up, which means that buyers could push for a higher correction.
Yahoo Shares Outlook
Yahoo shares enjoyed a bit of a rally last month after a successful NFL streaming service. However, the run could run out of steam since the company’s fundamentals are very weak.
In its latest earnings release, Yahoo reported a small increase in third-quarter revenue but sales excluding commissions to search partners fell 8%. Talks of a leadership shakeup are also weighing on the stock price.
Yahoo shares could pull up to the 38.2% Fib resistance at $37.50/share or until the 50% level at $40/share. The line in the sand for this correction is at the 61.8% Fib or $43/share, with an upside breakout past that point likely to indicate a long-term reversal.
Note that the continuation of the selloff from any of the Fib levels would also complete the formation of a head and shoulders pattern on the long-term time frames, indicating that further losses might be in the cards for Yahoo shares.
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