You Ask, We Analyze: The Bull, Bear Case For Robinhood's Stock
On Thursday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Friday. From the replies Benzinga selected one ticker for technical analysis.
Robinhood was surging over 20% after a 13D filing showed Emergent Fidelity Technologies and founder of crypto exchange FTX, Sam Bankman-Fried, took a 7.6% stake in the trading app.
The filing date suggests the purchase was calculated on April 29, the day after Robinhood printed a first-quarter earnings miss, which caused the stock to gap down over 10% that day.
The beaten-down stock, which plummeted over 90% from its Aug. 4, 2021 all-time high of $85 to an all-time low of $7.71 on Thursday, doesn’t seem to have the complete confidence of at least one insider because Robinhood’s Chief Financial Officer Jason Warnick recently sold 20,000 shares valued at $194,100.
The decrease in Warnick’s position is small in comparison to the 56,273,469 shares acquired by Bankman-Fried and Emergent Fidelity Technologies, however, and news of the purchase appears to have aligned perfectly with a potential big bounce day in the general markets, which accelerate Robinhood’s ascent.
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The Bull Case For Robinhood: Robinhood looked primed for a bounce because on Wednesday, Robinhood’s relative strength index reached the 32% level, which put the stock near oversold territory. On Thursday, the stock reacted to that condition, bulls came in and bought the dip and the stock closed the trading session up over 5%.
Robinhood is trading in a confirmed downtrend and for the pattern to reverse, the stock will need to print a higher low above the all-time low of $7.71. Bullish traders who aren’t already in a position could watch for Robinhood to print a reversal candlestick, such as a doji or hammer candlestick, above that level to take a possible position.
Bullish traders should keep in mind that the gap below, which was created on Friday, is about 90% likely to fill in the future and more conservative traders may choose to wait for that to happen before entering into a position.
Robinhood has resistance above at $9.94 and $12.77.
The Bear Case For Robinhood: Bearish traders will want to see profit-taking on Friday drop Robinhood down below the eight-day and 21-day exponential moving averages (EMAs). If the stock is unable to hold the EMAs as support, the indicators may continue guiding Robinhood lower.
If the stock is unable to trade above the most recent lower high at $10.97, the downtrend will remain intact at least temporarily. Bearish traders who aren’t already in a position could watch for a reversal candlestick such as a doji or shooting star to form at or below that level in order to take a possible position.
Robinhood has support at the all-time low.