$SHOP - SHORT TERM BIAS SHIFTS BEARISHNYSE:SHOP
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Shopify has been on the rise following the general market, it is up almost 200% from the low it formed in October, 2022. The stock is approaching the Macro supply zone formed by the 2022 downtrend. Currently, the stock seems overextended on the short term and a micro reversal is expected.
Here are the points supporting this analysis:
1. Price created the Overdrive Pattern AKA The Three Indians pattern
2. We are still at a point where investor sentiment doesn't mirror Macro-economical sentiment
3. Price got rejected from the premium quartile (0.75 level) of the Weekly trend
4. Technical Oscillators are overextended and showing exhaustion. RSI is showing a triple Divergence and the 14 EMA is pierced. MACD BEAR crossover is commencing.
5. Decreasing Volume while Price is increasing on the Weekly chart (Volume Divergence) (look at the MA of the volume and trend of the price since the low in OCTOBER 2022 was formed)
6. July's Monthly candle is showing indecisiveness with decreasing volume when compared to June's Candle
7. Downgrade of the US debt credit rating to "AA"
8. ISM Manufacturing Index is down for the month of August
Here are the point invalidating this analysis:
1. The Monthly sentiment is Bullish
2. Earnings beat Wallstreet estimates
3. The weakness of the last 3 bearish candles on the Weekly chart
Overall, I am expecting the price to keep increasing on the Macro level. However, short term bias is shifted to a bearish outlook following the idea of counter trending and speculating Macro trends on Micro levels. Shorting the stock from here would put your stoploss at a risky position, a bullish pullback on the intraday charts is favorable for a possible entry. Take profits at the supports mentioned below and model your risk. If you are a bag holder, holding this stock is favorable at the time and adding at $40.61 is a good price.
Support levels:
$60.46 (inner low)
$55.34 (external low)
$40.61 (Macro Demand Zone)
Resistance levels:
$68.63 (recent high)
$74.23 (lower barrier of the supply zone)
$78.00 (upper barrier of the supply zone)
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