From loved to hated, then back to loved, this is where it ends for Twitter Inc (NYSE:TWTR)...
The key number is, $57.64. You may be wondering, why $57.64? Well, after reporting earnings on July 29, Twitter Inc triggered a bullish pattern, known as an inverse Head and Shoulders bottom, by gapping above the thick grey line seen in the chart below. The upside target for this bullish formation match perfectly with a major technical level of resistance; which makes this level a very powerful resistance area for Twitter Inc.
If you look at the TWTR chart a little closer, you will notice that the $57.64 area was a battle ground for bulls and bears during late 2013, and early 2014. Notice how the stock came right into this area of resistance in late 2013 (highlighted by grey oval). It took Twitter a few days to be able to break above this area. Once above, institutions defended this area, which became support for Twitter as denoted by the two white arrows.
This battle ground area around the $57.64 (thin red line) level, was only breached by a massive gap down on the back of a disappointing earnings report. But about a week later the Twitter stock bulls made a charge and tried to push back above the $57.64 area. However, at this time bears had the upper hand, and Twitter Inc was quickly rejected as old support levels once broken, become solid resistance levels.
Now, as Twitter bulls make yet another charge towards this level, technical analysis suggests that the bears will once again have the upper hand. Twitter stock will be quickly rejected, offering a perfect opportunity for traders/investors to short the stock and profit as it falls.
For this level to be even more effective, Twitter must reach it within the next couple of weeks, and not confirm above it.
Kiliam Lopez
InTheMoneyStocks.com
