Shares of Etsy (ETSY - Get Report) became publicly traded just over two years ago and have since followed a trading pattern similar to other newly offered stocks. It is the cycle of initial pop and subsequent pullback, the initial phase taking it well above the offering price and the follow-through taking it just as quickly and sharply, back below it. This is often followed by a protracted recovery process.
The e-commerce craft company saw its stock price jump more than 100% in its first week of trading in April 2015, then immediately reverse direction losing 62% of its IPO value by the end of the year. It has since been involved in a protracted recovery process of its own, in which it has defined two important technical levels and is currently taking out intermediate term resistance.
The trading history of the stock can be seen on the weekly chart with the price action since early 2016 defining key resistance-turned-support, first in the $10.00 area and now in the $13.00 area. This month the relative strength index crossed above its centerline and moving average convergence/divergence made a bullish crossover. These are signs of improving price momentum and trend direction. Overall volume has improved over the last two months and Chaikin money flow suggests there is renewed buying interest in the stock.
The daily chart highlights the price action below the most recent technical level of interest in the $13.50 area. A triangle pattern begin forming below this level and above the rising 200 day moving average at the end of last year and when trend line support was broken in March this year, the stock price made a perfect measured move back down to the $9.50 level. It spent the next two months establishing a steady series of higher highs and higher lows before the earnings gap higher this month, which has it retesting the initial resistance level. The Chandre trend meter scores trend strength based on a series of technical indicators over six different time frames and its reading suggests the stock is in a strong uptrend, while the money flow indications support the recent pop in price. Etsy is a speculative long candidate after an upper candle close that takes out the $13.50 level using a close trailing percentage stop.