I believe the one-year chart of Twitter Inc. (TWTR) is forming a bullish reversal pattern. Let's check it out.
Now, the first thing you'll see looking at Twitter's one-year chart is that the stock had been making a series of lower highs and lower lows ever since its price peaked last July. These lower highs formed a downtrend, as denoted by the black diagonal line below:
However, Tuesday's action finally forced Twitter's stock price back above this downtrend line, as you can see in the black circle at right in the chart above. This signals the potential for a bullish reversal pattern.
There are also a number of additional points that support my assumption. For instance, not only has Twitter's stock price violated its long-running downtrend line to the upside, but its price has broken a high-volume resistance level at the $32.35 (the lowest black horizontal line above). In my opinion, that $32.35 level should now function as support for the stock.
As a result, TWTR is now challenging minor resistance at $33.75, with a bit more resistance coming in at $35.50. But importantly, the next level of true volume resistance doesn't appear until the $42 range (marked "resistance" in the chart above).
Additional supporting evidence for my thesis of a bullish reversal pattern is the notable increase in trading volume that you can see over four recent sessions as the stock's price rose. This is denoted by the black circle marked "strong volume" above, which shows that buyers' appetite for the stock is growing.
Also notice that Twitter recently surpassed its 50-day moving average, denoted by the blue line above. Lastly, observe that the stock is turning higher at a time when its relative strength vs. the S&P 500 has improved (the black circle marked "improving relative strength").
Add it all up and it looks to me like the downtrend that Twitter has been in since last July is in the process of reversing.
(This item has been updated.)