Benzinga - Digital World Acquisition Corp (NASDAQ: DWAC) was sliding more than 4% on Monday, with the bears trying to break the stock down from an inside bar pattern.
The special purpose acquisition company (SPAC) saw increased interest in November after former President Donald Trump announced a bid for the 2024 presidential election. The SPAC was the ninth most-searched-for ticker on Benzinga Pro last month.
Digital World has suffered several setbacks merging with Trump Media & Technology Group, the parent company of Truth Social, which has pressured the stock lower.
New Twitter CEO Elon Musk’s decision to reinstate Trump’s Twitter account has also added bearish pressure to Digital World, although the former president hasn’t posted from the account since regaining access.
Currently trading about 40% up from the Oct. 28 low of $15.57 and about 26% under the Nov. 7 high of $29.80, Digital World has settled into a triangle pattern and will meet the apex on Wednesday. This suggests that either the bulls or the bears are about to gain control of the stock.
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The Digital World Chart: Bullish traders will want to see Digital World break up from the upper descending trendline of the triangle on higher-than-average volume, which could indicate a longer-term rebound will be in the cards. Bearish traders want to see the stock break down from the pattern on high bearish volume.
- Digital World is also trading in an inside bar, which leans bearish because the stock was trading lower before forming the pattern. If Digital World breaks down below Friday’s trading range, the stock may find support at the bottom trendline of the triangle.
- The Trump-linked SPAC has been trading on decreasing volume since Nov. 16, which indicates Digital World is running out of both buyers and sellers. Decreasing volume is often followed by an influx of volume, which will help to determine the future direction.
- Digital World has resistance above at $23.79 and $27.48 and support below at $19.64 and $17.33.
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