During the "Lightning Round" segment of Mad Money Wednesday night, one caller asked Jim Cramer about Roblox Corp. (RBLX) : "The last quarter was not as good as we thought, but I think it's gonna snap back," Cramer told his viewers.
We looked at RBLX on July 13 and wrote that "We do not have a lot of trading history to work with and to me that means we shouldn't relax or give prices the benefit of the doubt. Price weakness is increasing and that means we should raise our stops to $81 from $75." Traders should have been stopped out.
Let's check the charts again.
In this updated daily Japanese candlestick chart of RBLX, below, we can see that prices made a new low for the move down on Tuesday. Traders rejected the low on Tuesday so we see a long lower shadow that could be a hammer pattern. Prices are trading below the 20-day and 50-day moving average lines.
The On-Balance-Volume (OBV) line shows a slow decline from early June suggesting that sellers of RBLX have been more aggressive. The 12-day price momentum study shows a higher low from June to July telling us that the pace of the decline is slowing and this movement is a bullish divergence.
In this daily Point and Figure chart of RBLX, below, we can see that prices have reached a downside price target of $77. This does mean that prices should rally but it can mean that technically driven traders might have covered their shorts.
Bottom line strategy: Aggressive traders could consider going long RBLX near $76 risking to $71.
