Twilio (TWLO) has started to pull back following the script of last month. Back on December 23 we wrote that "There is a possible spinning top on yesterday's candle pattern and today could give us bearish confirmation. With a bearish divergence on the weekly chart we could be starting a pullback to the $340-$330 area in the weeks ahead. Longer-term I would look for new highs in the months ahead."
Prices have reached the $340-$330 area but the weakness in the broad market to start the new year is telling me we could see a deeper pullback. Let's check out the charts again of this cloud communications platform.
In this updated daily bar chart of TWLO, below, we can see a weakening picture. Prices are pointed down and we could soon retest the rising 50-day moving average line.
The daily On-Balance-Volume (OBV) line has rolled over as sellers of TWLO have become more aggressive.
The 12-day price momentum study shows lower highs from October to December telling us that the pace of the advance has slowed and that typically happens as prices peak.
In this weekly bar chart of TWLO, below, we can see a similar picture to what we see on the daily chart. Prices are turning down with the OBV line weakening and the 12-week momentum study showing a bearish divergence with lower highs as prices made higher highs.
In this daily Point and Figure chart of TWLO, below, we can see that prices are getting close to a $324 downside price target.
In this weekly Point and Figure chart of TWLO, below, we can see a potential $589 price target. Maybe...
Bottom line strategy: TWLO could go much higher in 2021 but first we need to see prices stop declining. Stand aside until the middle of February.
