Western Union (NYSE :), the money movement and payment services company, fell by 4.3% on Tuesday, making it one of the worst performing stocks, as investors have priced the potential for free money transfers abroad with Facebook with Facebook (NASDAQ 🙂 & # 39; s newly announced cryptocurrency, Libra.
The social media giant, which is already under surveillance due to its monopoly and abuse of privacy laws, may find that it takes a little longer to launch Libra than hoped. US lawmakers demanded yesterday that Facebook cease its crypto plans pending approval from Congress, while their European counterparts also quickly called for the project to be investigated
Yet the excitement surrounding Libra arouses the specter of whether Western Union will see its main source of things eroding dramatically. Consumer-to-consumer money transfers make up 79% of the company's revenue, according to the first quarterly report published on May 7. This does not help the stocks, which, as technical analysis suggests, could be set for a deeper tumble.
WU Daily graph
Western Union has been trading in a rising channel since the beginning of the year. The pattern shows that although there were interruptions, these were profitable adjustments in a rising trend. In other words, both buyers and sellers agree that the shares are too expensive.
Even yesterday's dive was supported by both the channel bottom and the 50 DMA. However, both the RSI and the MACD have triggered sales signals – only the second time since the rising channel developed.
While the 50 DMA exceeded 200 DMA last month – triggering a golden cross, a signal that is being closely watched by many, not just technicians – the 100 DMA lends credibility to the channel bottom. Moreover, the RSI fell under the uptrend line of the same period.
As momentum tends to lead the price, this increases the chance of the price falling below its own channel bottom, with the 200 DMA being retested for the first time in 6 weeks
Although the RSI is a leading indicator, the MACD is an indicator of the backlog. When the short VHB broke under the long VHB, it therefore showed a weak position in current prices, causing the rear to rise to the leading indicator.
Conservative traders are waiting for the price to complete a declining series of peaks and troughs before they consider cracking stocks.
Moderate traders may risk a short position if the price falls below 200 DMA and exhibits its resistance properties, with at least one long red candle engulfing a green or small candle of both colors.
Aggressive traders can shorten their will, provided that they prepare a detailed trading plan to which they commit themselves and that fits their account and temperament. They must also expect volatility during a policy meeting.
Listing: $ 20
Stop loss: $ 20.50
Risk: $ 0.5
Target $ 18.50
Reward: $ 1.50
Risk-Reward Ratio: 1: 3