Donald Trump-Linked DWAC Sees High Volatility Amid Former President's Most Recent Indictment

Digital World Acquisition Corp DWAC spiked 4.19% on Friday before closing the trading day down 0.7% after former President Donald Trump was indicted on multiple federal charges.

The SPAC, which is expected to eventually merge with Trump’s Trump Media & Technology Group (TMTG) company (which owns Truth Social), may be experiencing high volatility due to traders betting on whether the platform will see increased traffic. Given that Truth Social isn't publicly traded, investors are left to base their evaluations of its performance largely on Trump's assertions, which have been shown to be inaccurate in the past.

Regardless of the news, Digital World formed a triple bottom pattern near $12.80 on Friday, which suggests a bounce could be in the cards.

A double bottom, or triple bottom pattern, is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back-tested the level as support, and is likely to rebound again. It is possible the stock may retest the level as support again, creating a triple bottom or even quadruple bottom pattern, respectively.

The formation is always identified after a security has dropped in price and is at the bottom of a downtrend, whereas a bearish double-top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized, and subsequent increasing volume may indicate the stock will reverse into an uptrend.

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The Digital World Chart: Although Digital World may have printed a triple bottom pattern on Friday, the stock also formed a shooting star candlestick, which suggests lower prices could be on the horizon. Bullish traders want to see the stock hold above $12.80 and for a reversal candlestick, such as a doji or hammer candlestick, to form above that level, which could indicate a bounce may occur.

• Digital World has rejected the eight-day exponential moving average (EMA) each time the stock has touched the level for the last 10 trading days. If Digital World can’t regain the level as support by closing a trading day above the indicator, the eight-day EMA may continue to guide the stock lower.
• Although Digital World has seen higher-than-average volume recently, the bears are in control. Bullish traders can watch for the SPAC’s relative strength index to begin to increase, which could predict momentum is returning.
• Digital World has resistance above at $12.81 and $13.50 and support below at $12.34 and the psychologically important $10 level.

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