Deutsche Bank (DB) and Twitter (TWTR) are setting up with similar chart patterns and both are sitting under $20 resistance. Here is what I’m looking for if any mean reversion activity kicks in.
Deutsche Bank (DB): the weekly chart is presenting as descending wedge and these are often read as bullish patterns. It has been trading under a bear trend line since 2007 and looks to be trying to carve out a base here although I’m looking for an ADX move above 20 to support this attempted breakout of the 10+ year bear trend line. The $20 level has previously been support but is now resistance and I’m watching for any weekly close and hold above this threshold to suggest that there could be some mean reversion move in the offering. If so, the 61.8% fib is up near other previous S/R near $80 and that would be the long term target for any corrective move higher.
Twitter (TWTR): The weekly chart of Twitter shows a descending pattern too but could easily be argued as being a bearish descending triangle as much as a bullish descending wedge. However, price has pretty much been flat-lining for the last 18 months and, for much of that time, has been under the effective resistance of the $20 level. Like Deutsche Bank (DB) though, price action looks to be breaking up through a bear trend line, this one of just 3 1/2 years, but Twitter has some momentum in this moves as evident by the rising ADX above 20.
I’m watching for any weekly close and hold above $20 to suggest that there could be some mean reversion move in the offering here too. If so, the 61.8% fib is up near other previous S/R, near $50, and that would be the long term target for any corrective move higher. I find the 50% and 61.8% Fibonacci levels quite effective for targeting breakout moves as can been seen in my article through this link.
It is somewhat ironic that I was on the receiving end of some nasty bile when I shared this weekly TWTR chart on Twitter this morning and this was my first dose of such treatment in 6 years. However, I have always enjoyed the Twitter forum for sharing trading information with like-minded people and will continue to do so. I just might be a bit more selective in future though!
Summary: Deutsche Bank (DB) and Twitter (TWTR) have been trading in long term downtrend patterns, for 10+ and 3 1/2 years respectively, but I’m on the lookout for technical clues about any attempt at some mean reversion.