We believe Etsy Inc. (ETSY) has formed a bearish reversal pattern.
In the Etsy chart, below, you can see the stock made a significant run from early February of this year, having topped out in the $50.00 area. Selling pressure at the beginning of October was consistent and sufficient to drop the price below volume support at the $44.00 level as well as its long-term uptrend line and 50-day moving average, as noted on the chart.
The $39.00 level has since functioned as support while the $44.00 level appears to have converted to resistance. We would note there is a large amount of overhanging volume at $44.00 that we suspect may be difficult to overcome as was the case through October. The support at $39.00 is now made up of modest volume.
With the break in trend and recent selling pressure, we suspect that, should new support fail, the next level of price support would occur at $33.00. This level is a combination of high volume as well as a gap fill that occurred last June.
So, given the break of the prior uptrend line, and volume selling resulting in violations of support and trend, we conclude that ETSY is in the process of reversing.