Is Mudrick Capital Acquisition Corp. II In Store For A Further Drop? Technical Levels To Watch

Mudrick Capital Acquisition Corp. II MUDS shares lost ground Tuesday.

The special purpose acquisition company is set to take the trading card company Topps public. Mudrick Capital Acquisition Corp. stock lost 15.16% Tuesday, closing at $11.58. 

Mudrick Capital Acquistion Corp. II is a special purpose acquisition company owned by Mudrick Capital, which on Tuesday was issued 8.5 million shares of AMC Entertainment Holdings Inc. AMC stock for a total of $230.5 million.

MUDS Daily Chart Analysis

• Mudrick Capital shares look to be forming what technical traders may call a head-and-shoulders pattern.
• The stock crossed below the 50-day moving average (green) Tuesday and trades above the 200-day moving average (blue), indicating sentiment in the stock may be turning bearish.
• The 50-day moving average may hold as resistance, and the stock may find support near the 200-day moving average in the future.

Key MUDS Levels To Watch

• The head-and-shoulders pattern occurs when a stock pulls back steeply and buyers are unable to push the price to new highs.
• This bearish reversal pattern will push the price lower until the stock finds support, typically near an area where the stock previously found support.
• The $12 level is an area where the stock has found buyers; shares may fall until the price reaches this area and either bounces or breaks below the support.

What’s Next For MUDS? 

Bullish technical traders would like to see the stock find some support and start turning around. If the stock can find some support near $12, it may be able to bounce back and avoid the drop that typically comes after a head-and-shoulders pattern.

Bearish technical traders would like to see the stock continue trading downward. The head and shoulders pattern looks to have pushed the price past the $12 level. If the price is able to hold below this level, the stock is likely to see another stronger drop.