Robinhood Stock Breaks Bullishly From This Long-Term Pattern: What's Next?

Robinhood Markets, Inc HOOD broke up Tuesday from a descending trendline Benzinga called out on Monday. On Wednesday, the stock gapped up slightly higher, slammed into a resistance at $42.44, rejected the level and fell slightly lower.

Robinhood’s business model could be in trouble, with Wall Street’s top regulator working to determine if payment for order flow (PFOF) should be reformed or barred altogether.

Although Robinhood offers zero-commission trading service on its platform, a significant amount of its revenues come from PFOF — a practice where brokerages receive payment for routing orders through market makers instead of directly to the stock exchange.

For technical analysts, the development, if it ever comes, may not matter so much, as there are patterns and support and resistance levels on Robinhood’s chart to which the stock should adhere. 

See Also: How to Buy Options on Robinhood

The Robinhood Chart: Robinhood has been trading under a descending trendline since Aug. 10. The stock has attempted to break up bullishly from the pattern on multiple occasions but, until Tuesday, it had failed. Although the stock’s highs were consistently lower under the trendline, Robinhood hit a low of $39.23 on Sept. 14 and has not made a lower low below the level, which indicates the bottom is likely in.

On Oct. 13, Robinhood put in a low at the $39.86 mark and reversed course into an uptrend. The stock has since put in a high at $41.79 followed by a higher low at $40.31, On Wednesday, the stock confirmed the uptrend by printing a higher high, despite retracing slightly, which confirms the uptrend is intact.

Robinhood is pinned between the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, which indicates bearish indecision.

The stock is trading below the 50-day simple moving average as well, which indicates longer-term sentiment is bearish.

• Bulls want to see big bullish volume come in and drive Robinhood up over the higher resistance level at $42.44. If the stock can regain the level as support, it has room to trade up toward the $45.96 mark.
• Bears want to see big bearish volume drop Robinhood back down underneath the descending trendline, which would cause the stock to lose support of the eight-day EMA. Below the trendline, Robinhood has support at $39.23.

The Robinhood platform. Courtesy photo.