Big social media stocks, like Twitter (NYSE: TWTR), have enjoyed their recent rallies, after reversing higher around mid-March. If some managed to form new all-time highs, Twitter was just able to recover some of its losses. It seems that during the lockdown period there was an increase in Twitter usage, as many people turned to social media during the stay-at-home period. The recent unrests in the US also increased demand for the company’s services. But from the beginning of June, TWTR is seen sliding, as governments started easing off their lockdown measures, and on Friday last week, the stock took a beating, together with the Facebook stock (NASDAQ: FB). Some investors are starting to get worried that, despite the increase in the social media usage, businesses are stepping away from advertising on those platforms. Some because of the lack of demand for their products and services, and some because social media is becoming an even bigger playground for misinformation, hate speech and political games. One of the company examples is Unilever (AMS: UNA), which suspended its advertisements being pushed through Facebook, Instagram and Twitter platforms. It is believed that Procter & Gamble (NYSE: PG) might do something similar.
Looking at TWTR’s technical picture on our daily chart, we can see that the price fell sharply on Friday, breaking below some of its key support areas, like the 30.29 level, marked by the low of May 29th. The stock continues to trade below a short-term tentative downside resistance line taken from the high of June 8th. From the technical side, there is still a possibility for the share price to continue falling, hence why we will target slightly lower levels, at least for now.
A further decline might force the stock to test the 27.12 hurdle, marked by the lowest point of May. If by any chance the share price gets a hold-up there, we could even see a small rebound. However, as long as TWTR remains below the aforementioned downside line, any pullback may be classed as a temporary correction. If so, another slide might bring the stock back to the 27.12 obstacle, a break of which would confirm a forthcoming lower low and could clear the way towards the next possible support area, at 25.06. That level is marked by the low of April 21st.
The RSI and the MACD are both pointing lower, so far. The RSI is below 50 and the MACD is below its trigger line, but still remains slightly above zero. That said, it seems that both indicators are somewhat in support of the downside scenario, for now.
Alternatively, in order to examine the upside again, we would like to see TWTR breaking the previously-discussed downside line and pushing at least above the 33.78 barrier, marked by the high of last week. This way, the stock may pick up more buying interest, which could lead to a test of the 35.46 hurdle, or even the 36.94 level, marked by the highest point of June.
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