[ Jump to the 2024-06-02 update ]
[ Jump to the 2024-05-25 update ]
February of 2023 is the month when DKNG started its ‘back-to-life’ journey.
After printing an all-time high at $74.38 in March two years before that, DKNG traded at $9.77 in May of 2022.
February 2023 is when the stock started respecting its 32-week SMA and 35-week SMA support lines, which it kept respecting to this date.
Fast forward a year and a month, DKNG’s weekly chart show the stock was trading a notch below $50. DraftKings has been climbing up the stairs with a desire to hit $50, bouncing off the support area that its best respected SMAs defined:
DraftKings reversed just a few pennies (43) below the round number. It’s been a long rally since the stock last visited the support area, and a breather was due to accumulate new energy, especially if market participants planned to take it through the psychological barrier:
With all that said, where would buyers place their buy orders?
Some would prefer the round $40; Some would draw a straight ascending trendline that connects the bottoms of ‘higher low’ candles, and place buy orders on that trendline; Some would use moving averages as support lines/areas and buy when price reaches that area.
Last week DKNG broke the $40 mark and traded as low as $39.04 before it bounced back roaring to close the weekly session at $43.13:
The 32-week SMA ended the week at $37.63. This was one dip buying opportunity, however, at this point, it is unclear if that was the stock’s due visit to support, or there’s more to come.
Next week, on May 2nd, DraftKings is scheduled to report its quarterly earnings, which has a potential to play a big factor in the stock’s price action. No one knows how the stock will react, however, we know where its best respected support area is, and therefore, we can prepare accordingly.
2024-05-25 Update
Four weeks have passed and DraftKings punched that card.
DKNG kissed the 32-week SMA and ended the week 3.73% above it:
Another step is built.
The 32-week SMA, which DKNG started respecting back in January 30th, 2023, continued its upward trajectory and now sits at $39.34.
Watching ‘as a backup’ from below is the 35-week SMA support line, resting at $38.47. DKNG started respecting this MA at the same day as it started respecting the 32-week.
2024-06-02 Update
It seems that DraftKings punched that card way too hard, that it punched a hole through its support…:
As a matter of fact, DKNG did not trade THROUGH its support lines, but rather it gapped down and traded BELOW them.
Next week we will see if this was a pierce-and-snapback, or pierce-and-down.