Twitter Inc TWTR 2.05% shares cooled on Thursday afternoon after making a surprising push to as high as $18.58 earlier in the day. Without any meaningful news driving the surge, traders quickly took the opportunity to sell the stock.
It appears as if the big jump is not the breakout Twitter bulls have been hoping for, and it’s back to the drawing board for traders watching the stock’s chart.
Twitter bulls were hoping that Thursday’s move could be the breakout they have been looking for since the stock bottomed in April. Since that time, Twitter has been forming a technical trading pattern known as a symmetrical triangle, in which is it trading sideways in an increasingly narrow trading range. As a stock forms the pattern, a descending resistance line (the red line in the chart below) and an ascending support line (the green line in the chart below) appear to “pinch” the share price until it breaks out of the triangle violently in one direction or another.
These breakouts typically happen on high volume, and Thursday’s brief surge in Twitter’s price didn’t come on heavy buying. The stock closed Thursday’s session back within the confines of the triangle at $17.92.
Looking ahead, Twitter bulls and bears will continue watching…
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