Tweet This: Twitter Could Be Ready to Retest Its March Highs

 | May 10, 2018 | 9:09 AM EDT
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I tweeted a just few minutes ago but I have not reviewed the charts of Twitter Inc. (TWTR) since March, writing "TWTR could rally above $36 and the decline of Tuesday will become a distance memory but right now the risk of further weakness has been increased. Traders should continue to use a sell-stop just below $30.50."

Looking at a chart of TWTR this morning I can see that by the end of March the stock sank further below my suggested stop and closed below the 50-day moving average line. Prices have improved the past six weeks but are they on a strong enough footing to rebuy TWTR? Let's check.

In this daily bar chart of TWTR, below, we can see that prices are testing the April highs and are now above the 50-day moving average line but the line still has a bearish slope. The daily On-Balance-Volume (OBV) line peaked in March and weakened till the end of April telling me that sellers were more aggressive. There is a slight pickup in the OBV line this month but it may not be strong enough to propel TWTR higher from here. The Moving Average Convergence Divergence (MACD) oscillator generated a cover shorts buy signal in April but has yet to firmly move above the zero line.

In this weekly bar chart of TWTR, below, we can see that prices emerged from a base pattern and are above the rising 40-week moving average line. The weekly OBV line made a strong upside move from June but shows weakness the past two months. A new high from this indicator would be a strong sign that TWTR was headed higher. The weekly MACD oscillator is narrowing toward a possible fresh buy signal in the weeks ahead. It will depend on the price action.

In this Point and Figure chart of TWTR, below, we can see a potential price target near $37. A trade at $33.26 is needed for an upside breakout.

Bottom line: TWTR is poised to move higher but further sideways price action would not surprise me and it would actually be good to see further buying and a stronger OBV line. The Point and Figure chart suggests a rally to retest the March highs is possible but a target above those highs would give me more confidence to probe the long side again.

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