We reviewed the charts of Etsy (ETSY) on Nov. 23 and recommended that "Traders could go long ETSY near $270, if available, and then risk to $245. The $400 area is our first price target as a round number. Maybe $457 is possible after that." Well, the stock did not dip to $270 until early December so hopefully traders did not go long ETSY. If they did go long ETSY, they should have been quickly stopped out at $245.
Let's check on the charts again.
In the updated daily bar chart of ETSY, below, we can see that the shares have declined sharply the past two months. ETSY has been cut in half from around $300 to around $150. This kind of retracement/correction can attract longer-term investors. ETSY is trading below the declining 50-day moving average line and below the declining 200-day line.
The On-Balance-Volume (OBV) line shows a sharp decline and tells us that sellers of ETSY have been more aggressive. The 12-day price momentum study shows a higher low from December to January, which tells us that the pace of the decline is slowing. This is the start of a bullish divergence and can at times foreshadow a bounce or rally.