Twitter’s stock price fell by over 10 percent on Monday, following the social media giants announcement that they were banning United States President Donald Trump from its platform over the weekend.
Twitter lost around $5 billion in market cap as the stock plunged on the Wall Street open. Traders and investors are now pondering if it is time to buy the stock or steer clear for now as the company is seeing an exodus of Trump supporters into conservative platforms.
Consensus theory is that Twitter’s stock plunged in value as investors are worried that the banning of President Trump will see all of his 88 million Twitter followers starting to boycott the company. However, should the platform reinstate President Trump it could cause a huge momentum trade in the stock to the upside.
Very importantly, the stock saw a surge in buying volumes around the lows of the day on Monday, which would certainly imply that the stock had massive buying interest at bargain levels. This could also mean that traders and investors are still bullish towards the stock.
Potential negative catalysts down the road could be lawsuits brought against the company, which would certainly cause further losses in the stock. Furthermore, founder and CEO Jack Dorsey is coming under tremendous pressure from conservative voices at the moment.
Other platforms, such as Telegram have seen huge user growth since President Trump was banned from Twitter. The platform works on a strict security protocol and may not been as vulnerable to server shutdown as Parlour.
Traders also have to consider the long-term prospects of Twitter. Huge population growth in Africa, and the rise of social media across the world, the company still has significant growth potential this decade, and the upcoming Biden administration may take a more lenient view towards Twitter.
From a technical standpoint, Twitter’s stock does look good right now, and a recent breakout on the charts is still valid, even after yesterday’s huge 10 plus percent price correction.
Twitter Short-Term Technical Analysis
The four-hour time frame shows that a large price gap is still present on the charts after Monday’s huge plunge lower. We should not be surprised if bulls move to close this price gap at some point.
According to technical analysis the gap is located around the $50.00 level, making it a perfect psychological marker and technical spot for short-term and intraday traders.
Source by ActivTrader.
Traders looking to fade any strength into the gap may sell around the $50.00 level in expectation of further weakness.
To the upside, price stabilization above $50.00 could start a ripple effect, and cause technical buyers to pump the stock higher towards $57.00.
Twitter Medium-Term Technical Analysis
Looking at the daily time chart the overall technical importance of the $44.00 support level cannot be understated at this current moment in time.
A huge technical breakout from a broading wedge pattern is in play while price trades above the $44.00 level. This could mean that a huge upside move is coming if bulls continue to defend this level.
Source by ActivTrader.
According to the overall size of the pattern, Twitters stock price could surge towards the $80.00 level. Traders should be aware if price breaks back inside the wedge then a huge sell-off could take place towards the bottom of the pattern, around $20.00.