Shares of Airbnb, Inc. (NASDAQ:ABNB) are oversold and at a price level that was previously support. The stock also has had a huge amount of trading volume over the past few days.
These three dynamics mean there's a good chance the shares are about to recover and rally. Because of this, our team of trading experts has made it our Stock of the Day.
The term "oversold" refers to a stock's momentum. Momentum measures how far a price has moved in a given period.
Stocks spend most of their time within their typical or average trading range. But if there is aggressive selling that pushes the shares below this range, traders say that they are oversold.
These conditions can draw buyers into the market. They will be expecting a reversion to the mean or move back up into the trading range. Their buying could push the price higher.
ABNB is also at a price level that has previously been support. As you can see on the chart, the stock found support in early November 2023 at the $115 level.
ABNB) " class="wp-image-487498" srcset=" 1024w, 300w, 768w, 1036w" sizes="(max-width: 1024px) 100vw, 1024px" />Read Also: Five9 Faces Revenue Slowdown, Yet Analysts See Profitability And AI Potential As Key Upsides
There tends to be support at price levels that had been previous support due to seller's remorse. There are traders and investors who came to regret their decision to sell after the price moved higher.
Many of these remorseful sellers decided they would buy their Airbnb shares back if they can do so at the same price they were sold for.
So, now that the price has dropped back to this level, they are placing buy orders. This large concentration of these orders has created support once again around the $115 level.
The third dynamic that is potentially bullish is the large amount of volume that has traded. This could signal a capitulation on the part of the sellers.
Many of the traders and investors who wished to sell became frustrated because the shares kept moving lower. Many of them finally threw in the towel and decided to sell their shares regardless of the price. This results in large amounts of volume trading.
If buyers start coming into the market, they will have a hard time finding people to buy from. The sellers are finished. As a result, they will need to bid premiums to draw sellers back into the market. This could force the shares into a new uptrend.
This combination of being oversold, at support, and having a possible capitulation could all be bullish for ABNB. The stock may be about to move higher.
Read Next:
- Benzinga's 'Stock Whisper' Index: 5 Stocks Investors Secretly Monitor But Don't Talk About Yet
Photo: Shutterstock