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Carnival Is Breaking Down but Notable Support Looms

Carnival stock is moving slightly lower, breaking below some obvious support levels. However, there's an under-followed support mark that looms nearby.

Carnival (CCL) - Get Report isn’t giving investors too much to work with on Thursday, down about 2%.

However, the move came as the company quietly provides a business update for its second-quarter results and discussed booking trends.

Further, it comes as the market revs up to new highs.

In any regard, Carnival is struggling on the day. That’s despite the company’s plans to start sailing out of U.S. ports next month and as the Centers for Disease Control eases up on cruises.

In the most recent update, Carnival estimates it lost just over $2 billion in the second quarter. However, it said it plans to have all of its ships sailing by spring.

So far, the market is not too receptive to the news.

Although Carnival is a clear reopening stock, there are questions about its operating losses. Further, there are concerns about its valuation too.

Let’s look at the chart for Carnival.

Trading Carnival

Daily chart of Carnival stock.

Daily chart of Carnival stock.

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At first glance, the setup in Carnival is not that attractive. The 10-day moving average and downtrend resistance (blue line) continue to squeeze it lower. Further, shares are trading below last week’s low as Carnival breaks below the 50-day moving average.

Despite the volatile nature of Carnival stock, the ranges have been pretty orderly as shares bounce between its key retracement levels.

The stock broke out over the 50% retracement briefly earlier this month, although $31.50 was stiff resistance and prevented a run to the 61.8% retracement.

From here, keep an eye on $27.73 - last week’s low. A close below that could put more pressure on the stock.

However, the 21-week moving average looms nearby. This has been notable support since November, even though it's under-followed by many investors. 

A dip to this zone may be a buying opportunity for more aggressive investors. A notable break of the 21-week moving average could put $25 and the 38.2% retracement back in play. That provides a favorable risk-reward, given how well the 21-week moving average has acted as support.

On the upside, let’s see if we can get a push back above the 50-day moving average. A move back over this week’s high at $28.70 puts $30 and the 50% retracement back in play.

Above that opens the door to $31.50, then the $35 level.

I know that’s a lot of levels to take note of, but Carnival has a pretty clear roadmap despite its volatile nature.