Twitter stock recently formed a head and shoulders chart pattern on its daily time frame, indicating that the previous uptrend is about to turn. Price hovered above the neckline at $48/share for a while before breaking below support and confirming the selloff.
The head and shoulders pattern spans $48-$54/share, indicating that the price drop might last by as much as $6, which means that Twitter stock could head as low as $40/share in the near term.
Twitter Stock Forecasts
Of course this mostly depends on market risk sentiment, which appears to be favoring a selloff in equities these days. An event risk for Twitter stock price action this week is the FOMC statement, which would show if the Fed is still inclined to keep interest rates low for much longer and add support for businesses.
How Twitter stock reacts to the statement still largely depends on its phrasing, as emphasis on economic concerns locally and internationally could aggravate risk aversion and push equities lower. On the other hand, acknowledgements of recent economic developments while choosing to ply the cautious route in monetary policy could lead to more Twitter stock gains.
A recovery might last until the broken neckline support at $48/share while stronger rallies could take price up to the previous highs at $54/share. The recent earnings report of Twitter, however, indicates that a bit more weakness might be seen.
For one, the company only earned an adjusted 1 cent per share for the third quarter, with a declining rate of growth in its user base. As it turns out, account growth was at 13 million for the period, lower than analysts’ estimates of 16-18 million. Analysts don’t project that Twitter will grow as much as Facebook has, indicating that stock prices might trail behind for the time being.
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