How Long Will This Dip Last?
Great Trade!
Draftkings has been a great trade since the last rebound off of the support line in the long-term price channel supporting the current rally. Since I called out the potential trade opportunity, the price has climbed over 45%. Check out the link directly below to see the DKNG call out.
Is it time for a small correction in DKNG?
Today is one of the biggest selling days we have seen since the last correction. You can see this in the big red daily volume candle. And the day isn't over yet, so this red candle will get bigger as the day continues.
The selling coincided with a bearish divergence on the 4-hour candles and rejection of the resistance line in the short-term price channel DKNG has been confined within for several weeks.
Is the rally over?
I do believe there will be new highs printed soon. But a stock can't go straight up all of the time. So, if this selling continues into a full-on correction, then where are price points to watch for a possible rebound?
There are a few areas I will be watching for a potential rebound. As a technical trader, I like to buy dips at strong support levels during a strong rally. I am watching a few major support zones for a possible entry point.
We may see a rebound at the support of the wedge pattern I've highlighted directly below. I am also watching the major short-term and long-term horizontal support levels. The last line of defense would be the support of the long-term price channel DKNG has been traveling within for several months.
If I don't see a rebound at either of these support zones, then it would lead me to believe that the rally has ended temporarily. I would minimize exposure to this name at that point.
I almost forgot to mention the potential support zone of the long-term bullish price channel that has held DKNG up for quite a while. I have highlighted the support line in the chart below. Yet again, another support line to watch.
So, are you bullish towards Draftkings? Or do you think this rally will be short lived.
Good Luck Trading
As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Don't invest money that you can't afford to lose. Give some of your investments time and know when to cut your losses.
Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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股海踏浪 : With so many good stocks, why play with junk stocks that lose money year after year?
ThirtyOne : Great post as always, thank you .
SpyderCallOP 股海踏浪: The rally is strong with this one, though. I'm not a fan of the company personally. I'm not a big sports gambler. But as for swing trading the big rally, it is a good investment opportunity.
SpyderCallOP ThirtyOne: Thanks
SpyderCallOP 股海踏浪: I totally agree with you about not investing in an unprofitable company. Their financials don't look the best. But generally speaking, their quarterly financials have been on a roughly upward or improving trend for several several quarters. This is more obvious in the operating cash flow. If this trend continues, then they might finally turn a quarterly profit soon. Maybe within a year or so.
ThirtyOne SpyderCallOP: I rode my position from $34 to $45.5 and took the profits. I was hoping we would fall back to the lower end of your horizontal support line. That’s about the same level I had drawn. I stayed away from options except a few weekly calls in the beginning prior to/during the NFL playoffs. I do like this stock in the long run but just waiting for a more comfortable entry. I won’t be shorting it that’s for sure.
SpyderCallOP ThirtyOne: I feel the same way. I won't go short unless I see big selling stepping if and when the pice drops below the long-term support levels I have highlighted.
SpyderCallOP 股海踏浪: But then again, if this company ever provides a bad earnings report and more specifically bad guidance, then I think investors would sell in a big way. I don't think this stock will hold up against bad guidance like a lot of the bigger megacap stocks can.