Will Twitter ($TWTR) Go Back to the Island?

If you look at the six month price chart for Twitter ($TWTR) you will see a gap down in price in late October, and a gap up in early February. This leaves a three month price island where the stock traded between $36-$40.

Twitter ($TWTR) has been in a consolidation for the last month, trading between $46 and $48. The $48 is the level that the stock gapped down in late October and has been stiff resistance for the last six months.

A break of $49 needs to occur for the bulls in Twitter ($TWTR) to gain any momentum. That happens to be the upper band of the Bollinger, one of my favorite technical studies, and is also the level on our Seasonal charts that we have marked as a “Sell”.

Now there is a case for the bears as well where a break below $44, the lower Bollinger, could then catalyze the filling of the upside gap in early February, and challenge $40 to the downside.  I see this Bollinger Band contraction as a flag that a move is emanate and that a break below $45/$44 level would be bearish.

Have a great trading day!