SQ Square Weekly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended

Square has catapulted higher since the March bottom a huge move from 32 to 193+, or +500%; a six-bagger. The payment space is very active the last few months. CEO Jack Dorsey sleeps on bags of money wearing headphones that are playing ka-ching songs. However, all good things come to an end and SQ is singing its swan song on the weekly chart above. The rising wedge is ominous since the collapses from these patterns can be quite dramatic. The RSI, stochastics and money flow are at or coming off overbot levels agreeable to a pullback.

The red lines clearly show universal negative divergence across all chart indicators. There is no more fuel in the tank to take price higher. The MACD rolls over, however, price barely makes a matching high as compared to the prior two weeks, thus, price may try to come up again in the days ahead but that would only reinforce the MACD neggie d and lock in the top. A short the rallies mentality is prudent going forward. At the same time, watch out for a momentum stock like this, they can be difficult to short sometimes. You have to get a good entry by watching the hourly charts.

Price is extended above the moving averages requiring a mean reversion lower. SQ has violated the upper standard deviation band so a trip back to the middle band at 140, and rising, and 86, and rising, is on the table. The Aroon is at maximum bullishness the green line pegged in overbot territory and the red line completely in the cellar at zero. Traders cannot get more bulled-up on Square.

So the top is in on the weekly but interestingly, if you pull up the SQ monthly chart, you see a long and strong MACD line and the other indicators are sloping up in the near term (although neggie d over the last 2 to 3 years). Thus, after the multi-week decline, price should come up again for another matching high in the monthly time frame. So mixing the analyses together and sprinkling on some magic technical voodoo dust, SQ is topping out now on the weekly basis and will head lower for a few weeks. The drop will likely take it to the 130-160 congestion zone. Then, after, say a month or so of sogginess plays out, we will be in mid-November going into Thanksgiving, SQ will likely rally again and come back up to the current 175-195 area, say, in December. That will likely be THE top for Square and then multiple months of downside will follow. Of course the monthly chart will have to be monitored at month-end and then for the end of November to verify this path, or adjust it slightly.

Keystone does not hold a position in SQ currently but will entertain the notion to short it going forward. Taking a look at the SQ 2-hour chart, it is actually setting up to rally in the near-term. SQ will bottom in a few hours, probably today, and then rally back up probably to 184-ish. Daily remains weak and bleak. Thus, a nice short entry may appear on Monday and Tuesday after price bounces for a few hours say today into Monday. The daily chart wants more downside in its time frame and the weekly is cooked as discussed above. Thus, if she begins falling in earnest, the rising wedge negativity may kick in and the bottom could fall out for SQ at anytime. If you enjoyed big profits in SQ, scale yourself out over the next couple months such as selling one-quarter of the position today, and then another at the end of this month, then another in early November and then the last before Thanksgiving. A lot depends on how bad this selling will be on the weekly basis. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.