TWTR Charts

I'd say TWTR is a very speculative position, I'll likely keep a tight leash on this one, but depending on how it closes, I'd be okay with a gap up in the morning tomorrow, it's really the closing price and candlestick that I'm looking to here.

The reason I want to keep a tight leash on TWTR should be obvious, but the reason I'm willing to sit through a "possible" gap up in the morning, is because with the candlestick in place now, a "Hanging Man" which is a bearish reversal candle with a significant gap and change in character, any decent confirmation candle of the reversal candle on a daily chart is going to start with a gap up, such as:

Bearish Engulfing, Dark Cloud Cover, maybe even a Doji Star.

Here are a few charts, most of you know I don't trust parabolic move in either direction, they are one of the few price trends that do not need any significant reversal process and a such, are the closest to a "V" reversal as part of their normal character. Still there tends to be a very tight "U" shaped process, but far smaller than what proportionality of a normal process would look like on a move like this.

In addition, I LOVE gaps and I'm very sad that the market over the last several years has been so efficient in filling them, they use to tell us so much. Today for instance with increasing volume (which is still useful on a bearish candle like a hanging man) it raises the probabilities of the candle being what it looks like by a factor of at least 2:1 as the gap looks like a traditional "Exhaustion Gap".

 This is a what use to be considered a very typical/textbook bearish "Hanging Man" with increasing volume which is still useful in determining the probabilities of a successful candlestick signal, the gap alone is somewhat dangerous for the stock, but that small daily range that creates the "Hanging man's " head, is where the real trouble is in the psychology of this candle.


At "A" we have a nice, stable and strong uptrend, the pullbacks are consistent and healthy, price is near the top of the Bollinger bands and nothing stands out as troublesome.

Then between "A" and "B" note where the moving average goes flat and the Bollinger Bands pinch, this is indicative of a highly directional move, THIS IS THE SAME KIND OF SET UP IN SPOT VIX RIGHT NOW.

At "B" we have the breakout, I can't say there's anything really ringing any cautionary bells, but at "C" the increase in the ROC of TWTR is cause for some concern as the character of the stock has changed significantly and it's now walking the upper Bollinger Band, a sign of strength (especially when seen in a market average), but also a change in character and you see this kind of behavior in so many assets as they near the end of their run, whether to move to a reversal, a flat period or a top, they almost always have increased ROC on the upside.

The individual candlesticks in that area are also bothersome if you look close, upside and downside volatility have increased, there are a number of indecision candles with small ATRs or real bodies.

The 10 Minute Trend Channel has held the run on the upside, there's not a single stop out of the entire run, however the ATR just dropped off to the far right and the Trend Channel's stop is around $72.50, it should continue to climb do to the previous momentum. I'll be looking for a break of my Trend Channel and/or the channel going flat or turning down.

If I were a long swing/trend trader in TWTR, I'd be running a trailing stop since that gap today, I of course prefer my Trend Channel, it won't get you out at the top, but it will allow you to catch the meat of the trend without arbitrarily trying to decide where to take profits.

If you are interested, I'd set some alerts for a move under $72.50, that doesn't mean a clean turn down, but with a parabolic move like this, it sure does increase the chances of one.