After dipping as low as $14.12 in April, Twitter Inc TWTR 0.56%shares rebounded nicely in May, climbing to a new 2017 high of $19.78 by mid-month. However, the trip above $19 was short-lived, and the trading action in Twitter in the weeks that followed has been particularly bearish.
Technical traders recognize the pattern Twitter has formed in its chart since the beginning of May as the bearish “head and shoulders” pattern. Twitter’s recent bounce off $18 support stalled out at $18.72, forming the right shoulder of the familiar pattern seen in the chart below.
Now that Twitter has breached the $18 support level, the stock may have very little technical support below until it closes its post-earnings gap between around $15 and $15.75.
Despite periodic spikes on better-than-expected earnings reports and a series of buyout rumors, Twitter stock spend most of the first two and a half years following its 2013 IPO drifting lower.
However, after hitting an all-time low of $13.73 in summer of 2016, Twitter has stabilized to some degree. Outside of a brief, rumor-fueled push to $25.25 in October, Twitter has spent the majority of the past year and a half trading in a sideways range between $14 and $20. After making it within pennies of the $20 level in May, Twitter bears are anticipating…
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