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by Darius Anucauskas

The Downside Resistance Line Has Snapped

Since the company’s IPO in March 2017, Snap Inc (NYSE: SNAP) had been in a downtrend, dropping from the initial release price at 26.40 to the all-time low at 4.82, on December 21st, 2018. From that day, the stock started picking up the pace again, which led to a break of the long-term downside resistance line taken from the highest point of February 2018. Even though, according to the Reuters “Analyst Recommendations and Revisions” table, the stock is mostly seen as a “Hold”, the company has to find a way of how to revive itself and get back into the game, in order to become more attractive for investors.

The so-called camera company had recently appeared in the news, saying that they are thinking of introducing a new option that would allow users to either keep their posts for longer than usual, or even to store them on a permanent basis. In addition to that, the company is also considering to reveal identities of Snapchat users. But such initiatives might backlash with the fans of this application, as it could be killing the whole principal of Snapchat, which differentiates it from Facebook.

From the technical picture, as mentioned before, the stock has broken the long-term downside resistance line, which could be seen as a positive for the SNAP’s near-term outlook. But before we start examining higher levels, we would need to see the share price pushing above its key resistance level at 6.50, which continues to hold the price down since the beginning of this year. If eventually the break happens and the stock travels higher, this may increase the chances for Snap Inc. moving towards the 7.30-dollar price tag, which if broken, could raise SNAP to the area, near the 8.70 barrier. Previously, the barrier acted as a good support on September 20th. Now, it could take on the role of a potential resistance.

On the downside, a drop below the aforementioned downside resistance line could raise concerns over the stock’s upside potential. The idea could be abandoned, at least for a short-while, if the price falls below the 5.62 zone, marked by the low of January 16th. This way, we may start examining the possibility for SNAP moving further down towards the 4.80 obstacle, a break of which could place the stock into the unchartered territory of new all-time lows.

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