Shopify Corrective Move and Potential Targets

2023年8月10日

Hi guys! This is a Technical Analysis on Shopify (SHOP) on the 1 Week Timeframe.

Since its not the end of the Week, we have to wait till the end of week to see how this week's candle closes.

We ATTEMPTED to break
->1. The ORANGE resistance zone above the 1 FIB level
->2. The "MAJOR RESISTANCE" labeled line that represents a RESISTANCE trend that formed from the PRICE TOP.

WE WERE REJECTED after trying for 4 weeks (july 10th to August 7th).
The 4th weeks candle closed as an ENGULFING BEARISH candle.

Note: For price to break any trend line, it requires a minimum of atleast 3 major tests
This current one in my opinion, ONLY MAKES 2 touch points.
This strengthens the reason of why we got rejected.

So far this weeks candle is showing a much SMALLER body than previous weeks.
This can be an indication that perhaps SELLING is slowing down.
But come end of week, the CURRENT BODY cannot close larger than Today August 9th Candle.

We are currently:
-> BELOW the 21 EMA
-> Breaking the RED Channel i drew out
-> 0.786 FIB Level

Heading straight to the SUPPORT zone comprising of:
1. SUPPORT Horizontal black line
2. 0.618 FIB Level
3. The base of the DESCENDING Triangle.

***Being a confluence of 3 SUPPORT levels -> I believe us to attempt a bounce from the $53.00 area, maybe to retest the "MAJOR RESISTANCE" trendline

In my opinion, its important that we can somehow get back above these key levels come end of week.
If we cant, probabilities are pointing towards a small corrective move

Especially the 21 EMA, looking left reveals patterns where price can fall for upto couple weeks to even couple months.
Which can even validate or increase the probability of the descending triangle to play out

If that happens we will test:
1. First, the 0.5 FIB level at $47.44
2. Then the 0.382 FIB level, which is also around a intermediate Resistance turned SUPPORT line.
3. Worst case scenario = Range of 0.236 FIB level at $34.91 to about $23.90
----->*****going any lower would invalidate the current MACRO BULLISH trend****
-----> But going this low can have create some bullish patterns like a double bottom. But overall its just as of now, less probable.

But we have to just focus one step at a time, worrying about a target level, if the previous trend is broken and confirmed.
Ex). -> If we break below the 0.5 FIB level and confirm, only then is the 0.382 FIB lvl likely.

The STOCH RSI is showing BEARISH move down to the 20 level, we can continue to move below the 20 level and even stay down here for weeks to couple months. But the longer we stay at low levels especially those below 20 level, price tends to decline further.
So we need to pay attention to the level it ends up at.

The RSI is testing a SUPPORT zone, below it can indicate further price drop. Also notice that the RSI line is below the BLACK moving average. If you look left, if we are below it for extended periods RSI continues to drop, along with price. Keep this in mind.

Lastly, the ADX GREEN line, is on a decline, getting close to meeting with RED line. If a cross occurs, more BEARISH momentum can enter the stock. This could increase the probably that the correction continues for a longer timeframe.
We would need GREEN line to curve up and try to get ABOVE resistance line.


Stay tuned for more updates on SHOP in the near future.

Thank you for taking the time to read my analysis. Hope it helped keep you informed. Please do support my ideas by boosting, following me and commenting. Thanks again.

If you have any questions, do reach out. Thank you again.

DISCLAIMER: This is not financial advice, i am not a financial advisor. The thoughts expressed in the posts are my opinion and for educational purposes. When trading always spend majority of your time on risk management strategy.