TWTR Twitter Weekly Chart Falling Wedge Positive Divergence

Everybody hates Twitter. The management under CEO Jack Dorsey appears disjointed as the fledgling social internet company struggles. FB keeps stealing away the real-time event audience that Twitter always enjoyed a monopoly on. Investors have given up on the tweety bird; many analysts and traders say all is lost. When the sea of negativity is so thick you can cut it with a knife, that may be an interesting opportunity.

Twitter maintains a loyal following and it is going through growing pains. Many users would never want to deal with the Facebook drama and Twitter provides a clean and easy service. Tweets can be read by googling key words and no one has to be a member to read tweets. Twitter also remains a takeover possibility. Perhaps a white knight like AAPL, or GOOGL or other tech company with deep pockets will find a fit for Twitter within its own structure and plans. You never want to buy a stock based on a takeover possibility but with beaten-down TWTR it is a plus.

The red sideways triangle failed about one year ago. Remember how Keystone charted that triangle from late 2014 into 2015 and we were waiting for the resolution? Price collapsed out the bottom of the apex of the triangle at the 40 level. The vertical side of the triangle  is 40 which targets zero for price but that should not happen. Using about a 30-handle target drop instead would target this 10-15 area which has been achieved. You can say the sideways triangle pattern has played out.

The green falling wedge is in play along with universal positive divergence across all indicators. Price should bounce in the weekly time frame. TWTR violated the lower band and then returned to the middle band, but dropped again so that lower band at 13.05 must be left open as a possibility. The expectation is for TWTR to bounce strongly over the coming weeks perhaps moving back up towards 20.

The trade is tricky, however, since the monthly chart remains weak and after a few weeks of happiness, Twitter will likely roll back over and come back down to the 13-15 area, say in June-July. Overall, however, it seems that much of the worst weakness is over and TWTR may base for the next few months. And that takeover possibility always lingers so Twitter is a stock that may be up  +20% on any given morning if a takeover is announced. Of course catching falling knives may result in a bloody hand.

The ADX remans well above 30 so the downward trend in TWTR remains strong. When the ADX falls under 30 you will know that Twitter has firmly based and will likely move sideways to sideways higher going forward. Keystone just bot TWTR opening a new long position in the flailing tweety bird. The trade will be added to in this 13.0-14.5 range. Target would be say, 16-20 this month or early June. The trade will be exited if a half-decent gain appears due to the weakness in the monthly chart. Then a very long term position on Twitter is much more attractive say from the summer time forward. 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.