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Square Stock Tests Key Support For Fourth Time: Should Traders Be Wary?

May 13, 2021 5:15 pm
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Square Stock Tests Key Support For Fourth Time: Should Traders Be Wary?

Square Inc. (NYSE:SQ) shares traded lower Thursday amid overall market weakness.

The stock, which has exposure to the crypto space, may be moving after Tesla Inc. (NASDAQ:TSLA) announced that it's going to suspend Bitcoin (CRYPTO:BTC) payments. Square also announced Thursday it would begin to allow developers to build on top of the Square Online platform.

Square closed down 4.6% at $197.13.

sqdaily5-13-21.png

Square Daily Chart Analysis

  • Square shares might be breaking below the $200 support line after testing this area for the fourth time.
  • The stock is trading below the 50-day moving average (green), and crossed below the 200-day moving average (blue) Thursday, indicating sentiment in the stock looks to be turning bearish.
  • The price may find resistance near each of these moving averages in the future.

Key Levels To Watch

  • The stock is testing the $200 area for the fourth time in recent months.
  • The more times a stock touches the support line, the weaker it gets as buyers are unable to push the price back higher.
  • If the $200 level can hold as support, the stock may find a strong resistance level near $280 as the stock has peaked near this area twice.

What’s Next?

Bullish technical traders would like to see the stock bounce at the $200 level and start heading higher. Bulls want to see the stock begin to form higher lows and head towards the $280 resistance.

Bearish technical traders would like to see the stock fail to hold the $200 support and start heading lower. If the price is able to consolidate for a time below the support, it may see a stronger push lower.

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