Roblox Corporation (NYSE:RBLX) reached a new all-time low of $29.52 on Thursday as it continued its descent in a descending channel pattern on the daily chart. The pattern is bearish for the short term but can be bullish down the road.
- For bearish traders, the "trend is your friend" (until it's not) and the stock is likely to continue downwards. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders will want to watch for a break up from the upper descending trendline, on high volume, for an entry. When a stock breaks up from a descending channel, it's a powerful reversal signal and indicates a rally is likely in the cards.
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The Roblox Chart: Roblox began trading in the descending channel on April 12 and has made a consistent series of lower lows and lower highs within the pattern. Roblox’s most recent lower high was printed on April 25 at $35.18 and the most recent lower low was printed at the $$33.54 mark the day prior.
- On Thursday, Roblox attempted to break up bullishly from the pattern but rejected and wicked from the upper descending trendline. The stock was unable to break through the channel partly due to lower-than-average volume, which was measuring in at about 8 million at press time compared to the 10-day average of 22.26 million.
- A bounce is likely to come over the next few days because Roblox’s relative strength index (RSI) is measuring in at about 27%. When a stock’s RSI reaches or falls below the 30% level it becomes oversold, which can be a buy signal for technical traders.
- Roblox has a gap above on its chart between $59 and $66.34. Gaps on charts fill about 90% of the time, which indicates Roblox will trade up to fill the empty range in the future, although it could be an extended period of time before that happens.
- Roblox has resistance above at $36.04 and $43.10 and no support in terms of price history below.
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