Uber (UBER) stock was hit hard on Wednesday, driven partly by the action in ride-sharing rival Lyft (LYFT).
In the face of a robust rally in the overall market on Wednesday, Lyft stock fell 30% on the day after it reported earnings — and kudos to the team at RealMoney, who nailed the downside target.
Uber traded in sympathy with Lyft yesterday, falling as much as 12%, then recouping to finish the day down 4.6%. Its earnings report — which was rescheduled from after the close on May 4 to before the open — wasn't enough to bring in the buyers.
Now, Uber is down another 5.5% on Thursday and flirting with a test of this week’s low.
It's unfortunate price action because while Lyft’s chart was a clear no-touch, Uber actually had some positive developments.
The beating we’re seeing in the broad stock market on Thursday is not helping matters, especially as tech gets pounded.
Let’s look at some key levels in Uber stock now.
Trading Uber Stock
Chart courtesy of TrendSpider.com
The $28.40 area clearly has significance for Uber stock. It was support multiple times in 2020, was not tested in 2021, and had been strong support in March.
On Wednesday, Uber stock breached this level and dropped to a low of $25.90 before bouncing.
On Thursday morning, Uber stock briefly reclaimed $28.40, but has faded back down toward this week’s low. How it trades from here is critical.
If it can hold this low and then reclaim $28.40, the bulls have very well-defined downside risk by using a stop-loss just below $25.90.
On the upside, they will want to see a move back above $30 and ideally up to the declining 10-week moving average.
Notice that the 21-week moving average has been the active resistance mark for this stock.
On the downside, $25.90 is key. If Uber stock breaks this level and can’t reclaim it, $24.50 is on the table. That’s the 78.6% retracement of the entire post-Covid range. If Uber can’t hold this area, then a break down toward $20 is on the table.
Be careful with this one and follow the levels if you’re so inclined to trade it. It’s out of favor and, at the moment, akin to a falling knife.
