Why Airbnb Is Setting Up For A Massive Breakout
Deron Wagner | Nov 19, 2021 12:00AM ET
Recent IPO Airbnb (NASDAQ:ABNB) is forming a bullish cup with handle pattern and is poised to break out to a new all-time high. Here, we show you the ideal entry point to score big gains from an explosive breakout.
IPOs that draw the most attention often disappoint shortly after going public.
However, hot IPOs often go on to be big winners after the initial hype fades.
One such IPO was Airbnb, which went public with much anticipation in December of 2020.
After its initial IPO at $146, ABNB rallied for a few months before topping out just above $200.
Despite a positive start, ABNB slid lower for the next five months before undercutting its IPO price of $146 before bottoming out in July.
Since then, ABNB has climbed all the way back to its highs at the $210 area.
Now, ABNB is forming the handle of a bullish cup with handle pattern.
Check out the weekly chart of ABNB below:
Notice that ABNB cleared a key downtrend line and reclaimed its 10-week moving average in August.
A bullish volume pattern emerged following that downtrend line break, with several blue spikes of above-average volume indicating institutional accumulation.
The red volume bars on lighter volume indicated very little selling, which is what we want to see.
Now, ABNB is starting to form the handle portion of a 9-month cup with handle pattern (41% deep from the high).
The standard buy entry in a cup with handle pattern is above the high of the handle ($212.50 area).
Zooming in to the daily chart time frame, notice that ABNB flashed a big time buy signal on Oct. 5–as it gapped up and closed 13% higher on volume that was 400% above average:
After the large gap up, the price stalled above $200 and pulled back in to start forming the current handle portion of the pattern.
Although the standard buy point is over the handle high, traders could look to enter partial position size on weakness (such as a test of the rising 10-day EMA).
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Another possible entry point on weakness is a test of closing price of the gap up day ($202 area), down to psychological support at the $200 level.
We are already long ABNB in The Wagner Daily stock trading report with a similar entry point (exact entry and stop prices restricted to subscribers).
If ABNB can punch through $210 and hold, then it could easily take a shot at the all-time high from last February ($219 area).
A rally above this level would put the price at new all-time highs, with no overhead resistance and nothing but blue skies above.
This is an ideal scenario for both swing and position trades, as a breakout to new highs could spark a new uptrend for the next 6-12 months (depending on market conditions).
As always, we will immediately alert members if we buy ABNB in the stock portfolio.
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