The Key Takeaways
- Morgan Stanley raised its target price and upgraded Robinhood’s stock, resulting in a new three-year record for the shares.
- A reading of 70 or higher confirms a bullish trend in price, while also indicating overbought stock conditions, which may trigger short-term profits.
- Investors should monitor important support levels on Robinhood's chart around $24 and $20, while watching key resistance levels near $45 and $60.
Morgan Stanley’s upgrade of Robinhood Markets and significant increase in its price target will remain in the minds of investors Tuesday, after the firm said that it was well positioned for the results of the U.S. election.
Investment bank has raised its target price for the stock from $24 to $55. It said that a possible reduction of cryptocurrency regulations by the new Trump administration will create an active trading environment at retail in 2025. It also said that an increased number of initial public offering and a rebound in mergers and acquisitions activity will support a rise in revenue.
Robinhood stock has nearly tripled from the beginning of the year to Monday’s close. The increase is attributed to the recovery of trading revenues as well as the growth of its product offering. The stock gained more than 3% in Monday's regular session, hitting a three-year high, before slipping 1.2% to $37.40 in after-hours trading.
We break down Robinhood’s chart weekly and highlight important price levels to watch.
Overbought RSI indicator
Robinhood’s shares broke out of a triple-bottom in February. Since then, they have been trending higher. The only exception was a short retracement back to the MA 50 and upper trendline pattern during the August sell-off.
RSI confirms bullish market momentum when it is above 70. However, this indicator can also signal overbought condition in a stock. This could lead to short-term profits being taken.
Investors may be looking at some key levels of support and resistance on the Robinhood chart.
Monitoring Support Levels
Investors are advised to keep an eye on the $24 area after a retracement. Near the two prominent peaks in June and August, this area may draw buying interest. A move like this would mean a fall of approximately 40% from the high reached last week, similar to that seen in the stock during its summer decline.
If the share price falls below $20, the stock may return to lower support. This is an area where investors can look for entry levels near the 50-week MA and April’s swing high.
The Key Levels of Resistance to Monitor
Shares could rally to the initial level of $45. This location is where there may be some overhead pressure from sellers near the small countertrend peak formed in August 2021, early on the stock’s downtrend.
A break above this mark may result in a move towards the crucial $60 region. Investors buying the shares lower could try to sell the stocks near this psychological round number. It is also close to the high price of the stock in the third week following its public debut, around mid-2020.
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According to the article, as of its date of publication, the author did not possess any of these securities.
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