Block Inc (SQ) is showing signs of a bullish reversal on the monthly chart, as it displays a divergence between the price and three momentum indicators: RSI, MOM and OBV.
The price of SQ has been making lower highs and lower lows, forming a descending channel pattern. However, the RSI, MOM and OBV indicators have been making higher lows, indicating that the selling pressure is weakening and that the buyers are gaining strength.
The RSI measures the momentum of the price movement, and a divergence occurs when the RSI moves in the opposite direction of the price. The RSI has been rising from 32.77 in July 2022 to 46.01 in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This suggests that the downward momentum is slowing down and that a reversal may be possible.
The MOM measures the rate of change of the price, and a divergence occurs when the MOM moves in the opposite direction of the price. The MOM has been rising from -19.23 in July 2022 to -1.69 in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This indicates that the rate of decline is decreasing and that a turnaround may be imminent.
The OBV measures the positive and negative flow of volume in a security over time, and a divergence occurs when the OBV moves in the opposite direction of the price. The OBV has been rising from 1.16B in July 2022 to 1.25B in October 2023, while the price has been falling from $75.23 to $48.68 in the same period. This implies that there is more accumulation than distribution of shares and that the demand is increasing.
All these indicators suggest that the stock may have bottomed and that a new uptrend may begin. However, the stock may face some resistance at the 200-week moving average, which is currently around $65. The stock may also experience some volatility and corrections along the way, as the market conditions and investor sentiment may change. Therefore, I would still be cautious and flexible, and use stop-loss orders and risk management techniques to protect my capital and limit my losses in case the stock does not behave as expected.
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Good follow through on the weekly candle so far...
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We have breached resistance. Lot of room to run.
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79-80$ should provide some resistance. Be careful in this area.
I agree that we are bullish on the month for a reversal. There has been a doji, and then a strong green candle on the heikin ashi candlestick chart on the monthly chart. The bar has also closed above the 10 EMA. I think SQ for the next months is bullish. But I am in a swing trade to the downside for the next 2 weeks or so.
jkish19871
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@OptionsMastery, yea, I believe in the bullish narrative still, however when it rejected right off my resistance lines…I had to exit the trade. Successful though!
jkish19871
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Technical analysis is simply the expression of fundamentals through price action on a chart. One could reasonably infer the bullish divergence on the monthly MAY be because a company that ranks in the top 10 of BTC holders will see some significant upwards price action. How much BTC does PayPal hold?
jkish19871
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Not to mention, the H&S pattern has already broken down. You’re missing the part when H&S reverse. I truly don’t understand how a trader could look at the SQ chart and say, “I bet we could get more downside out of this thing when BTC has breached 36k and has already surpassed an important breakout point…but what the hell do I know?
jkish19871
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You’re aware that there is a decent correlation coefficient between the price of BTC and SQ right?
without_worries
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It is a big ass head and shoulders with confirmation!! The only reason to ignore this is emotion. Switch it to Paypal if payment processors are your thing. I'm not trading either.