Twitter's chart is 'ugly': Technician

Why the Twitter sell-off is about to get worse

Twitter shares continued their descent on Tuesday falling to a fresh 52-week low as the stock sold off nearly 3 percent in midday trading. And now, almost a week after Dick Costolo announced he would step down as the company's CEO, investors are asking one burning question: Is the stock a falling knife or basement bargain?

"I think the stock goes below $30," Cowen and Co.'s David Seaburg said Monday on CNBC's "Trading Nation." "Everybody has been saying that there was a line in the sand at $35, and obviously we breached that [Monday]."

According to Seaburg, despite the selloff, the stock is "expensive" at current levels and investors should wait until shares hit the mid-$20 range to step in and buy them. "There's just no reason to pay this price for Twitter," he said. "When you think about a growth investor and why they'd own a company like this, it's because they want user base to grow, and they want users to grow. It's just not happening."

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The technicals support Seaburg's dour views, at least according to one technician's chart work.

"There doesn't appear to be support for this stock," technical analyst Todd Gordon said Monday, also on "Trading Nation." "The chart is just ugly."

Since hitting an all-time high of $74.73 in late December 2013, the stock has lost more than 50 percent of its value. "I think support is broken for this stock and now that we've pushed below $35, I think the next stop is $28," added Gordon, founder of TradingAnalysis.com. Twitter shares closed below $35 Monday for the first time in a year.

And if the stock does fall below that $28 level, which is 19 percent lower than Monday's closing price, Gordon said it could open up the floodgates for an even steeper selloff. "There's no support to the downside which means we could see substantial losses," said Gordon. "I think upside is relatively limited here."

Wall Street consensus, however, is not as bearish on the stock—out of the 36 analysts that cover Twitter, 60 percent rate the stock as a hold, with the average price target being $46.24, according to FactSet.

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