Back on August 24 we reviewed the charts of Lyft ( LYFT) and wrote that, "Shares of LYFT look destined to break their late January lows and fall further in the weeks ahead. This potential top pattern projects a tentative price target in the $25-$20 area, taking the height of the pattern and projecting it lower. Avoid the long side."
Well, the shares just reached our price target Wednesday with a dramatic downside price gap, so let's check on the charts again.
In the daily bar chart of LYFT, below, we can see that prices moved lower the past several months but gapped lower this Wednesday to reach our top pattern price target (see above). LYFT is below the declining 50-day moving average line and below the 200-day line which also has a negative slope.
Trading volume is heavy as traders vote with their feet and the On-Balance-Volume (OBV) line remains pointed lower. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In the weekly Japanese candlestick chart of LYFT, below, we see a bearish picture. Prices are in a longer-term downtrend.
The weekly OBV line is weak and the MACD oscillator is bearish.
In this daily Point and Figure chart of LYFT, below, we can see the big decline with the price gap filled in.
In this weekly Point and Figure chart of LYFT, below, we used a five-box reversal filter. Here the software gives us a $16-$15 price target.
Bottom-line strategy: Wednesday's price gap may turn out to be an exhaustion gap but it is too early to draw that conclusion. For now the gap is bearish and the trends are still bearish. Continue to avoid the long side and resist the urge to catch a falling knife.
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