Roblox Corporation (NYSE:RBLX) was soaring up over 20% higher on Wednesday after opening slightly lower to start the trading session.
The lower open was a bearish reaction to Roblox’s first-quarter earnings report, which was printed after the market closed on Tuesday.
For the quarter, the online gaming platform reported a loss of 27 cents per share on revenues of $631.2 million, which missed the consensus estimate of a 22-cent loss on revenues of $639.46 million.
The bounce up from the lows is likely due to Roblox being heavily oversold, with a relative strength index measuring in at 27% on Tuesday. The stock has been beaten down since reaching a Nov. 22 all-time high of $141.60, declining over 80% since that date.
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The Roblox Chart: The bounce up intraday on Wednesday, which surpassed Tuesday’s high-of-day, was causing Roblox to work toward printing a bullish engulfing candlestick on the daily chart. If the stock closes above the $26 level, the bullish engulfing candlestick could indicate Roblox will trade higher on Thursday.
- Despite the surge to the upside, Roblox remains trading in a downtrend on the daily chart, with the most recent lower high printed on May 4 at $35.06 and the most recent lower low formed at the $21.89 level on Tuesday and Wednesday. If the stock is about to reverse into an uptrend, it will eventually need to print a higher low above Wednesday’s low-of-day.
- Roblox attempted to break up through the eight-day exponential moving average (EMA) but on Wednesday morning was struggling with the area. If the stock is able to regain the eight-day EMA as support over the coming days, it will give bulls more confidence going forward.
- The stock has a gap above between $59 and $66.34 that was left behind on Feb. 16. Gaps on charts fill about 90% of the time, which makes it likely Roblox will rise up to fill the empty trading range in the future, although it could be some time before that happens.
- Roblox has resistance above at $29.52 and $36.04 and support below at the all-time low of 21.65 and the premarket low of $20.26.
