The Priceline Group Inc. (PCLN​) shares fell more than 10% on Tuesday after the company reported third quarter financial results. While the company exceeded expectations for the quarter, fourth quarter guidance came in well below expectations. Management expects earnings per share of $13.40 to $14.00 per share during the fourth quarter, which is lower than the consensus estimate of $15.56 per share, while revenue is expected to be $870 million to $910 million, versus a consensus of $1 billion.

Third quarter revenue jumped 20.1% to $4.43 billion – beating consensus estimates by $90 million – while net income of $35.22 beat consensus estimates by 97 cents per share. Gross travel bookings also increased by 18%, which was higher than the 11% to 16% that analysts were expecting. Room nights jumped 18.6%; car rental days rose 5.5%; and airline tickets fell 11.8% – largely positive results for the quarter. (See also: How Priceline Group Makes Money.)

Technical chart showing the performance of The Priceline Group Inc. (PCLN) stock

From a technical perspective, the stock broke through all major near-term support levels, including the 50-day moving average, 200-day moving average and all pivot point supports, to levels last seen earlier this year. The stock also broke down from a head and shoulders (H&S) pattern, which could signal a longer-term decline. The relative strength index (RSI​) fell to oversold levels of 21.43, but the moving average convergence divergence (MACD​) experienced a sharp move lower.

Traders should watch for some consolidation at trendline support levels of around $1,650.00 per share or a move lower to support levels of around $1,500.00 from late last year. The MACD and H&S pattern suggest that a longer-term downtrend is coming, but the oversold RSI could mean that there is some consolidation before a sharp move lower. Traders will also be keeping an eye on whether these adverse fundamental trends become a long-term problem. (For more, see: Trade Priceline and TripAdvisor Stocks on Guidance.)

Chart courtesy of The author holds no position in the stock(s) mentioned except through passively managed index funds.

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