Online-only used-car retailer Carvana (CVNA) has been rallying since making a low in December. Is this going to be a flash in the pan or the real deal?
Let's check out the charts and indicators.
In the daily bar chart of CVNA, below, I can see that the shares have rallied and pulled back and rallied again. Prices are trading above the rising 50-day moving average line and above the 200-day line which is still weak.
The trading volume has increased since December and suggests investors have taken a fresh interest in the company. The On-Balance-Volume (OBV) line has been strong since December telling me that buyers of CVNA have been more aggressive than sellers.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory.
In the weekly Japanese candlestick chart of CVNA, below, it is hard to see the price action. The shares made a huge decline from their 2021 zenith. Prices have made a base pattern the past 12 months.
Trading volume has increased and the OBV line has soared. The MACD oscillator has improved for months but is still below the zero line.
In this daily Point and Figure chart of CVNA, below, I can see a potential upside price target in the $26 area.
In this weekly Point and Figure chart of CVNA, below, I used a five-box reversal filter, which suggests a price target in the $36 area.
Bottom-line strategy: Aggressive traders could go long CVNA around $15 risking to $12. The $26 area is my first price target.
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