Quick Take Technical Analysis: Snap, Inc

Snap, Inc SNAP gapped down 21.78% following its third-quarter 2021 earnings miss printed on Oct. 21. The company also said it expects fourth-quarter revenue to come in at a range of between $1.165 billion to $1.205 billion, which is below estimates.

• Snap appears to have hit a bottom near the $51.66 level. The stock has tested the level as support three times and on Friday appeared to be rounding back to the upside.
• The back test of the level on four separate occasions may have created a bullish quadruple bottom pattern on the daily chart.
• Snap’s relative strength index has been sitting near the 30% level since the sell off. When a stock’s RSI nears or reaches the 30% level it becomes overbought, which can be a buy signal for technical traders. It should be noted, however, that the RSI can remain extended for long periods of time.
• Snap has a gap above between $60.78 and $73.89. Gaps on charts fill about 90% of the time so it is likely Snap will trade back up into the range at some point in the future.
• Snap’s daily volume has been steadily decreasing, which indicates the stock is in a period of consolidation. Traders can watch for increasing bullish volume as an indication the stock may be breaking up or for increasing bearish volume to indicate Snap may break to the downside.
• Snap has resistance above at $54.06, $57.48 and $61.60 and support below at $50.96 and a key support level at $47.92.