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Editor's Picks: Community Q4 earnings insights & highlights
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Consolidation Near 52-Week Highs
Affirm has had a rough couple of months after printing 52-week highs last year. Its last quarterly earnings were a beat, but it was not good enough to get it out of the downward consolidation pattern it has been in since printing 52-week highs. There is not a lot of support beneath the current price, so there is a possibility that things could get ugly pretty soon.
Indicators in Bearish Territory
The major subindicators paint a somewhat bearish picture. With RSI in bearish territory and MACD about to flip bearish, things aren't looking good in the short term.
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Void of Supply
There are not a lot of supply zones below the current price. It is almost complete open space with very little technical structures to provide support.
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You can see this clearly within the position cost distribution. There are not a lot of holders concentrated anywhere below the current price level.
Sometimes, conditions like this can lead to an exaggerated selloff as there are no substantial supply zones to prop up the price.
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Before the price action enters the "open space" it will need to fall below the $37.50 - $37.00 zone. There are no large areas of supply to potentially provide support below this support zone.
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Potential Support Zones
If the price action continues to make new lows below $37 and falls into the supply void, then there are a few areas to watch for potential support.
There is a lot of options exposure at the $35 price point. It is possible that there might be some support around that area. The same goes for the $30 price point. Other than these two options gamma support levels, the nearest technical support level would be around the $25 - $27 zone.
All of these areas are substantial drops from the current level, so things look pretty risky for a technical trader. It might be wise to consider covering any long positions and waiting for a dip to buy.
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The Financial Picture Could Look Better
There has not been a profitable quarterly report in years as well as no annual profit ever being reported. I would imagine that the financial picture needs to get a lot better before prospects for a long-term investment can be considered.
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One bright spot in the financial statements is the fact that revenue has been steadily increasing for several years in a row. If this trend continues, then that would be a sign of a growing company.
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The technical picture is looking more and more negative after the previous 52-week highs were printed. There is a lot of downside risk for technical traders. The fact that the price has already fallen nearly 30% from precious highs has me itching to buy the dip, but any signs of upward momentum have been met with even stronger selling. So traders are still cautious.
The financial picture doesn't look the greatest. The consistently growing revenue streams are a very good indicator of growth. But the company is getting further away from turning an annual profit.
Based on the technicals and the financials, I can see any downside being substantiated. But apparently, the market likes this company as it has rallied over 485% from 52-week lows. The "buy now pay later" industry is gaining popularity with consumers. It doesn't seem like the industry is fading away at all. So, I would strongly consider buying the dip in this name if there is any more substantial selling that occurs.
So, how many of you are invested in Affirm?
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. Read more
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