By Christopher Romano, Reuters
Reuters – Mastercard shares may have further to fall after sliding about 8% from their August record, with several technical indicators pointing to another drop of roughly the same magnitude.
The credit card network’s shares closed at a record $599.86 on Aug. 24 before turning lower. The stock fell as low as $546.12 on Thursday, its weakest level since July 27.
Technical analysts who study stock-price patterns rather than company fundamentals are seeing several warning signs.
Mastercard’s Bollinger Bands, which track price volatility around a moving average, are trending lower, suggesting the decline could continue.
Another widely followed momentum indicator, the Moving Average Convergence Divergence, or MACD, is also pointing downward.
The Relative Strength Index, or RSI, offers little evidence yet tha the selloff has gone too far. The indicator has been hitting new lows alongside Mastercard’s share price, suggesting downward momentum remains intact.
The stock’s chart also appears to be forming what technical analysts call a “head and shoulders” pattern, typically viewed as a bearish signal.
Based on the size of that pattern, Mastercard could eventually fall toward $500 to $505, implying another decline of about 8% from Thursday’s intraday low. Potential support could emerge around $540 and $515 along the way.
There is, however, a potential bright spot for investors betting on a rebound.
Mastercard formed a “doji” pattern late Thursday, when a stock closes near where it opened after trading both higher and lower during the session. Technical analysts sometimes interpret this as a sign that sellers are losing conviction.
A rebound above Thursday’s high of $557.20 could strengthen the case for a recovery. A move above $571 to $572 would undermine the bearish outlook.
Mastercard did not immediately respond to a request for comment.
**Key levels:** Mastercard’s record close was $599.86 on Aug. 24.Technical support sits around $540, $515 and ultimately $500 to $505, while moves above $557.20 and then $571 to $572 could weaken the bearish signals.—Reuters
