Square Loses Ground After Earnings Miss: What's Next For Shares?

Square Inc. SQ shares are trading lower Friday after the company reported quarterly earnings of 37 cents per share, missing the analyst estimate of 39 cents per share. Square also reported $3.84 billion in sales this quarter. This is a 27% increase over sales of $3.03 billion in the same period last year.

Square was down 2.3% at $241.64 at press time.

Square Daily Chart Analysis

• The stock is floating around near the middle of what technical traders call a sideways channel.
• The $280 price level is an area where the stock has struggled to cross above in the past and holds as resistance. The $200 level is an area where the stock may find support. These levels may continue to hold until one of them is broken in the future.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock is likely facing a period of bearish sentiment.
• Each of these moving averages may hold as a potential area of resistance in the future.
• The Relative Strength Index (RSI) has been fading lower the past couple of weeks and now sits at 43 on the indicator. This shows that the stock has been seeing more sellers push into the stock and overall there is more selling pressure.

What’s Next For Square?

Bullish traders want to see the stock make a bounce and start to form higher lows. They're looking for higher lows up to resistance and then see a break of resistance. A period of consolidation above resistance could result in the stock seeing more bullish moves in the future.

Bearish traders would like to see the stock continue to make lower highs and for the stock to head toward the possible $200 support level. If support is broken, it could be a hint the stock is ready to see further bearish moves.