Shopify Shares Test Key Technical Support, Historical Data Points to Potential Rebound
By Financial Markets Desk
Shares of Shopify Inc. (NASDAQ:SHOP) showed tentative signs of stabilization on Monday, edging slightly higher after a brutal January decline that pushed the stock to its lowest point in nearly six months. The e-commerce platform's stock closed at $131.16, up a marginal 0.05%, but technical analysts are eyeing a critical chart level that could signal the start of a recovery.
The stock is now testing its 260-day moving average, a widely watched long-term trend indicator. Historical analysis conducted by Schaeffer's Investment Research reveals a compelling pattern. According to Senior Quantitative Analyst Rocky White, SHOP has traded within 0.75 points of this moving average—a proximity defined by the stock's 20-day average true range—on only four other occasions in the last ten years. In each prior instance, the stock was trading higher one month later, boasting a perfect 100% success rate with an average gain of 12.1%. A move of that magnitude from current levels would propel the stock toward the $149.75 mark.
Adding to the bullish technical case, Shopify's 14-day Relative Strength Index (RSI) has plunged to 16.4, deep into "oversold" territory. Such extreme readings often precede a short-term technical bounce, as selling pressure becomes exhausted.
The recent weakness in SHOP shares mirrors a broader downturn in the tech sector, pressured by shifting interest rate expectations and macroeconomic concerns. However, this test of a historically reliable support level will be closely watched by traders as a potential inflection point for the beleaguered stock.
Market Voices
David Chen, Portfolio Manager at Crestview Capital: "The historical data here is statistically significant, albeit from a small sample size. While not a guarantee, it provides a quantifiable framework for a mean-reversion trade. The oversold RSI reinforces the setup. We're watching for a confirmed bounce above the 260-day MA with increasing volume."
Rebecca Vance, Independent Retail Investor: "I've been averaging down on this dip. The fundamentals of Shopify's business—merchant solutions, payment penetration—haven't changed. This looks like a market sentiment issue, not a company-specific one. The technicals just give me more conviction in my buy-and-hold strategy."
Marcus Thorne, Editor at 'The Short Report' Newsletter: "This is pure hopium for bagholders. Relying on four data points from a decade that included a historic bull market is reckless. The macro environment is completely different now—consumer spending is tightening, competition is fierce. That moving average isn't a magic trampoline; it's more likely to become resistance on any dead-cat bounce before the stock resumes its slide."