Robinhood Markets, Inc (NASDAQ:HOOD) was trading lower on Tuesday after surging 15% higher on Monday between about 2:55 p.m. and 3:10 p.m. to close the trading day 14% higher.
At about 3 p.m. Monday, the stock was halted due to volatility, which was caused by a report that speculated FTX may be looking to acquire the trading platform and financial services company.
FTX, a Bahamian cryptocurrency exchange, responded to the report to say it had no “intention of taking any action toward changing or influencing the control of the issuer,” despite FTX CEO and co-founder Sam Bankman-Fried holding a 7.6% stake in Robinhood.
On Tuesday morning, Deutsche Bank analyst Brian Bedell maintained a Hold rating on Robinhood and lowered the price target from $10 to $9.
Goldman Sachs analyst Will Nance weighed in on Monday, upgrading the stock from Sell to Neutral and reducing the price target from $11.50 to $9.50.
The initial news of the acquisition caused shares of Coinbase Global, Inc (NASDAQ:COIN), viewed by some as the more likely possible Robinhood acquirer, to plunge over 6% on Monday and an addition 9% on Tuesday. In comparison, Robinhood was holding up rather well.
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The Robinhood Chart: On Tuesday, Robinhood was settling into an inside bar pattern, with all of the price action taking place near the upper end of Monday’s mother bar. The inside bar leans bullish because Robinhood was trading higher before the consolidation took place.
- Traders can watch for a break up or down from Monday’s mother bar on Wednesday to gauge future direction. The pattern will hold more weight if the break is made on higher-than-average volume on smaller time frames.
- Robinhood is also trading in an uptrend pattern, with the most recent higher low printed on June 22 at $7.28 and the most recent higher high formed on Monday at $9.72. If the stock falls further over the coming days, bullish traders can watch for Robinhood to print a reversal candlestick, such as a doji or hammer candlestick, above the $7.30 level for a possible entry point.
- On Tuesday, Robinhood attempted to regain support at the 50-day simple moving average but failed and wicked from the level. The eight-day and 21-day exponential moving averages (EMAs) are trending slightly below the share price, however, which may act as support if Robinhood drops further. If Robinhood is able to remain above the EMAs, the eight-day EMA will soon cross above the 21-day, which would give bullish traders more confidence going forward.
- Robinhood has resistance above at $9.94 and $12.77 and support below at $7.71 and $7.28.
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