Trade Idea: RBLX

June 22, 2021 | By greg | Filed in: Stocks, Trade Setups.
RBLX – Weekly chart, from IPO to present

I know it’s been awhile since I have posted on here and I am much more active on Twitter, but eventually this site will be updated a few times a week. I am trying to hammer out some classes so I can finish a degree by the end of summer, as I have found it doesn’t matter what you know, it’s what that paper says. Anyways, lets talk stocks..

Above you see the RBLX chart showing the weekly timeframe. There isn’t a whole lot here as they just IPO’d a few months ago for analysis we have to get creative. I have drawn some parallel price lines at the current trading level where we have a clear level of support (previous resistance. I noticed this chart last night and really like the risk/reward ratio on a long trade here. Let’s break it down and see what the opportunities are.

First off, this has sold off considerably the past two weeks and we are currently near a high volume node as seen in the chart above. Usually these highly traded price ranges will act as a magnet in a sideways market, and since RBLX is fairly new and I have yet to get a feel for its price movements, I can only treat it like the other WSB crowd type momentum story stocks.

The price currently is trading inside a range of previous highs and lows that form a perfect base to go long. We can assume the probability is high that if the price drops below $78 handle, it’s probably going to go lower barring any broadening type formations.

The trade:

Entry$79.50-$80.00 – obviously the lower, the better
Target 1) $87.00, 2) $90
Stop$78.56 or if stock goes rangebound, 2 weeks
RBLX – Daily chart, from IPO to present

There are some downsides to this trade I would like to point out, the most obvious being the trend is still down and we are trying to pick the bottom. The tight stop in addition to being at a pretty solid level on the chart are key components of risk management in this trade. Another glaring factor is that we also could be looking at the makings of a bear flag although the history of price action in this area suggests more that this could be consolidation. Regardless, I have already entered this trade in a half sized position. Good luck!

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