Robinhood Markets, Inc (NASDAQ HOOD) was outperforming the general market on Tuesday, holding slightly higher while the S&P 500 slid over 1% at one point.
At 10:07 a.m. an institutional trader placed a massive block trade on Robinhood, purchasing 500,000 shares above the ask at $10.30. The trade represents a whopping $5.15-million bullish bet the stock will trade higher.
Robinhood has developed bullish signs on the daily chart that suggest the stock has room to run, although lower-than-average volume on Tuesday looked to be stalling a notable move higher. If the triple bottom pattern continues to dominate, the delay may be short-lived and the stock may catch momentum over the coming days.
A double bottom pattern is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back tested the level as support and is likely to rebound again. It is possible the stock may retest the level as support again, creating a triple bottom or even quadruple bottom pattern.
The formation is always identified after a security has dropped in price and is at the bottom of a downtrend, while a bearish double top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized, and subsequent increasing volume may indicate the stock will reverse into an uptrend.
- Aggressive bullish traders may choose to take a position when the stock’s volume spikes after the second retest of the support level. Conservative bullish traders may wait to take a position when the stock’s share price has surpassed the level of the initial rebound (the high before the second bounce from the support level).
- Bearish traders may choose to open a short position if the stock rejects at the level of the first rebound or if the stock falls beneath the key support level it created the double bottom pattern at.
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The Robinhood Chart: On May 24, May 25 and May 26, Robinhood formed a bullish triple bottom pattern. On Friday, the stock reacted to the formation by shooting up almost 12%.
If Robinhood continues to react bullishly to the triple bottom pattern, the stock may gain enough power to pop up above the $10.92 level, which coincides with the 50-day simple moving average (SMA).
- If Robinhood can gain the resistance level and the 50-day SMA as support, the stock will also negate the downtrend in which it has been trading since May 13. If Robinhood can print a higher high above the $10.55 level, the stock will then need to form a higher low above $8.97 to confirm an uptrend is in the cards.
- Robinhood is trading above the eight-day and 21-day exponential moving averages (EMAs), and on Tuesday the eight-day EMA was attempting to cross over the 21-day. If Robinhood is able to hold above $10, the eight-day EMA will cross above the 21-day, which would give bullish traders more confidence going forward.
- Robinhood has resistance above at $10.92 and $12.77 and support below at $9.94 and $7.71.
