Roblox Corporation (NYSE:RBLX) broke up from a bull flag pattern on Wednesday that Benzinga called out on Feb. 2.
On Feb. 3, The Bear Cave issued a short report labelling Roblox “the leading platform for pedophiles.” The report included a number of serious allegations including that links were posted on the community’s platform that linked to illegal child pornography sites and that Roblox worked to conceal allegations of pedophilia on its platform.
A Roblox spokesperson responded to Benzinga to express the allegations were “wholly misleading, false and irresponsible.”
Shares of Roblox reacted bearishly to the report, closing that trading day down almost 17% lower, but the following day bulls came in and bought the dip, which held the stock within the flag formation of the bull flag pattern.
See Also: Benzinga's Daily Brief On Trending Tickers For Feb. 10, 2022: GameStop, Twitter, Disney and More
The Roblox Chart: When Roblox broke up from the bull flag pattern, it also broke up from a descending channel that had been holding the stock in a long-term downtrend since Nov. 22. The move higher also caused Roblox to confirm it is now trading in an uptrend, as it has printed both a higher low and a lower high on the daily chart.
On Thursday, Roblox began the trading session in an inside bar pattern after opening slightly lower that Wednesday’s closing price. The stock was able to break through Wednesday’s high-of-day within the first hour of trading, which is bullish — but bulls will want to see follow-through on the move.
Roblox has regained the eight-day exponential moving average as support, but in order to get momentum going, Roblox will need to regain the 21-day EMA as support, which was holding the stock down late Thursday morning.
If the stock can regain the 21-day and trade above it for a period, the eight-day EMA will eventually cross above the 21-day, which would give bulls more confidence going forward.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
- Bulls want to see big bullish volume come in and push the stock up above the 21-day EMA, which could help the stock regain a support zone at $76.83. Bulls should also remember the stock will eventually need to print a higher low within its uptrend. Roblox has further resistance above at $83.41 and $93.52.
- Bears want to see big bearish volume come in and drop Roblox down below $69.77, which would negate the uptrend. The stock has support below that level at $60.69 and $53.63.
