BlackBerry Secures A Big Bullish Trend Change: What's Next?

BlackBerry Ltd BB printed a second-quarter earnings beat Wednesday afternoon, which helped the stock bust up bullishly through a descending channel pattern on Thursday. The stock was garnering attention on r/WallStreetBets where many traders and investors on the platform believe BlackBerry is undervalued.

Options traders seemed to predict the stock would react bullishly to earnings and on Wednesday there were no notable put contracts purchased but the traders did complete orders for a number of calls. At 12:54 p.m. on Wednesday a trader purchased 418 call contracts at $1.13 a piece with a March 18, 2022 expiry and a $14 strike.

The order cost the trader a total of $47,234. If the trader sold those calls at 10:20 a.m. today when BlackBerry was trading at $10.79 the trade would have been worth $66,880 for a profit of $19,646.

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The BlackBerry Chart: After breaking up through the channel BlackBerry flew through a resistance level at the $10.54 mark on massive volume. By mid-morning about 13 million shares of BlackBerry had exchanged hands compared to the 10-day average of 8.84 million, which indicates there is a high level of interest in the stock.

If BlackBerry can close the day near its high-of-day price, it will print a big bullish Marubozu candlestick which could indicate higher prices are in the cards for Friday. BlackBerry will eventually have to consolidate sideways, however, to stop its relative strength index from becoming overextended toward the 70% level.

The price action caused BlackBerry to regain support of the eight-day and 21-day exponential moving averages and continued bullish action will help the eight-day EMA to cross above the 21-day, which would be a bullish indicator. BlackBerry was also able to regain the 200-day simple moving average as support, which indicates overall sentiment has become bullish.

• Bulls want to see sustained bullish momentum while remembering consolidation is needed. The stock’s next resistance level is at $11.72 and above the level there is further resistance at $12.69.
• Bears want to see big bearish volume come in and push BlackBerry’s stock down below the $10.54 area which could push it below the moving averages. Below the levels, BlackBerry has support at $$9.48 and $8.77.