The Technical Setup For Twitter Into Q3 Earnings

With Twitter, Inc. TWTR set to report third-quarter earnings Thursday morning, traders are taking one last look at the stock’s chart for any indication of what to expect from Twitter and how to play the stock following its report.

Earnings Setup

Twitter has taken a beating since peaking at nearly $48 back in June, but the stock has actually performed relatively well so far in a difficult October for the market. While the S&P 500 has declined by 7 percent in the past month, Twitter is up about 2 percent in that time. Since hitting a near-term low of $26.19 back on Oct. 11, Twitter has regained 8 percent, while the S&P 500 has dropped another 1.5 percent in that time.

The S&P 500 has made new October lows this week, but Twitter has been stable, holding well above its Oct. 11 level.

Since Oct. 15, Twitter's Relative Strength Index (RSI) has hovered just below 50, its highest point since late August. Still, technical traders can’t ignore the death cross (50-day SMA/200-day SMA) in Twitter’s chart that took place at the beginning of October and the fact Twitter hasn't been able to break above its 50-day moving average since its second quarter earnings miss in July.

Key Technical Levels

If Twitter beats expectations Thursday, the $30 level will be major resistance. The 50-day SMA is currently at $30.59, and Twitter hasn't closed above $30 since early September despite several attempts.

On the downside, traders will be watching for support at $26, where the stock bounced Oct. 11. Below $26, the next line of defense is likely the stock’s 2018 low of $22.04 set way back in January.

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