Previously, I outlined two possible trades on SQ. Short below 170 to the gap fill or buy the double bottom. If you took the short, you would have made it halfway to your target (the top of the gap fill). After the recent candles, Ive spotted a potential bullish divergence outlined on the chart. That combined with the hammer candle at support leads me to believe that a reversal could be in play. A fair target on the long side would be about 195. I would look for SQ to close above the 5ema. Stop out below the hammer candles low. Please be aware that reversals are hard to time. The trend is still down so this is a counter trend play.
Trade closed: stop reached
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If you did not wait for the close above the 5ema for confirmation, you would be stopped out of this trade.
Why is SQ getting hammered so bad? Even MA in the same space is doing relatively coasting compared to being beaten to submission... Thoughts?
BrokenTypewriter
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@sipiceanu, I read two news events. First SQ is buying Afterpay which is in the BNPL (Buy Now Pay Later) space. The Consumer Financial Protection Bureau is investigating BNPL companies. AFRM got hit hard today by this. Second SQ rebranded itself as Block. Now HR Block is suing for trademark infringement. Double bad news.
Decam9
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@BrokenTypewriter, Thanks for the detailed explanation. That explains why SQ was relatively weak today. @sipiceanu I think SQ has also been weak over the past month because it is associated with crypto which has taken a breather. A lot of crypto names have taken a hit. Look at PYPL for example. It could also be due to inflation and potential rate hikes. High growth stocks tend to underperform when yields and rates go up. Many of the names in ARKK etf are getting crushed for this reason.
sipiceanu
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@Decam9, @BrokenTypewriter: Yes. Thank you both for taking the time to respond. It is what makes TradingView awesome, is getting opinions. Your perspectives make sense. And yes one of the reasons for asking is to determine how much longer can a person keep buying the dip, yet seeing things dip even more; balancing decision against when there is a reversal in direction vs. the other opportunities out there. In addition a few places mention a rotation from Growth to Value stocks again, just like we saw a few months back when the inflation scare took place.