2 Ride-Sharing Stocks May Be Ready To Plunge Lower: Here's Why

Uber Technologies Inc. UBER and Lyft Inc. LYFT are two ride-sharing stocks that took a tumble Thursday.

The stocks traded lower as reports from the U.S. Labor Secretary stated most U.S. gig workers should be classified as company employees.

Below is a look at the technicals.

Uber Daily Chart Analysis

• Uber stock has been forming into what technical traders would call an ascending triangle pattern, and may have broken out of the pattern to the downside.
• The stock is trading below the 50-day moving average (green), but above the 200-day moving average (blue), indicating the stock is most likely facing a period of consolidation.
• The 50-day moving average may hold as a place of resistance on the chart and the 200-day moving average is a potential area of support.

Key Levels To Watch

• The stock has been building higher lows throughout the year into an ascending triangle pattern. On Thursday, the stock dipped below the higher low trendline before climbing back above it again.
• The next few trading days should tell traders whether the stock will continue to trade in the ascending triangle pattern or if it will fall below the pattern, potentially plunging lower.
• The ascending triangle shows a flat top resistance near the $62 level as this is a price level where sellers have always previously been able to push the price back down.
• A break above flat top resistance with consolidation gives the stock a chance to push higher.

Lyft Daily Chart Analysis

• Lyft stock may have fallen out of what technical traders may call a bullish flag pattern. The pattern is considered bullish, but a break below the support lines could send the stock lower.
• The stock is trading below the 50-day moving average (green), but above the 200-day moving average (blue), indicating the stock is most likely facing a period of consolidation.
• The 50-day moving average may hold as a place of resistance on the chart and the 200-day moving average is a potential area of support.

Key Levels To Watch

• The bullish flag pattern happens after the stock sees a large gain and starts pulling back.
• The stock typically will trade in a downwards channel following the large gain. The line connecting the highs starts acting as a resistance level while the line connecting the lows will start to act as a support level.
• A break above the resistance may send the stock on its next leg up, and a break below support may cause the trend to change.
• Lyft looks like it may have broken below the support line, and could make a lower move.
• The following days will tell the tale of whether it can get back into the channel and have the change to breakout, or if it will continue to plunge lower.