Peloton Plummets On Treadmill Recall: How Does The Stock Chart Look?

Shares of Peloton Interactive Inc PTON plummeted Wednesday after the company issued a recall of its Tread and Tread+ treadmills.

The use of Peloton's treadmills has resulted in multiple injuries and one child's death and the U.S. Consumer Product Safety Commission has advised customers to stop using the products.

The report comes ahead of Peloton's scheduled earnings print set to be released Thursday after markets close. Traders may be wondering how far south Peloton’s shares can run.

See Also: Peloton's Safety Issues: What Investors Need To Know

The Peloton Chart: On Wednesday morning, news of the recall caused Peloton’s stock to fall through resistance at $94 and lose 14% of its value. Peloton had been trading in a bearish descending triangle since reaching an all-time high of $170.64 on Jan. 14.

Bearish sentiment has been strong in Peloton and the stock’s repeated touches of the $94 area weakened the level as support.

Peloton's stock is trading below both the eight-day exponential moving average (EMA) and the 21-day EMA, with the eight-day EMA trending below the 21-day EMA, both of which are bearish indicators.

There is a gap above on Peloton’s chart in the $115 area and because gaps are filled 90% of the time, it's likely Peloton’s stock will revisit that area in the future.

Bulls want to see a bearish volume climax and to signal the temporary bottom is in. If a volume climax happens, that would indicate the stock has run out of sellers and could prompt buyers to come in. If the stock can recapture the $94 area as support, it could move back to fill the gap and towards its next resistance level at $116.

Bears want to see sustained bear volume to drive Peloton’s stock down to its next support level at $82.50. If Peloton can’t hold that level of support, it could revisit the $72 mark before finding more support.

PTON Price Action: Shares of Peloton were trading down 13.5% at $83.59 at last check.