Bet on More Upside in DraftKings? Let’s Check the Charts First

DraftKings has been on fire this week, reversing off its lows and bursting higher. Do the charts points to more upside in the stock?
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DraftKings  (DKNG) - Get Report has been sizzling lately. While the stock is about flat near midday trading on Friday, the action comes after back-to-back days of big gains. 

Shares opened higher by 2.8% on Friday, but have stabilized near breakeven on the day. That’s as bulls digest a strong reversal on Tuesday, a 7.75% gain on Wednesday and a 9.5% rally on Thursday.

Not bad, but could there be more? As the sporting world eyes a return to action, we’ve seen investment money flow into names like Wynn Resorts  (WYNN) - Get Report, Penn National Gaming  (PENN) - Get Report and DraftKings all week.

Let’s check the charts to see what could play out in the days and weeks ahead.

Trading DraftKings Stock

Daily chart of DraftKings stock.

Daily chart of DraftKings stock.

On the daily chart, one can see the observations we just described above. That is, the powerful reversal off the $27.50 area and the powerful follow-through over the past few sessions. 

That's after the stock worked off the overhang of some insider selling

Amid that follow-through, DraftKings stock reclaimed its 10-day, 20-day and 50-day moving averages. To clear this many significant marks in one swoop is impressive and shows that bulls have some fight in them.

From here, they need to maintain above this cluster of moving averages, being careful not to give up too much of the stock’s recent gains. If shares can maintain above this area, it puts the 78.6% retracement in play, which is up at $37.47, just a bit above Friday’s high.

Weekly chart of DraftKings stock.

Weekly chart of DraftKings stock.

On the weekly chart, one will also notice the powerful reversal unfolding in DraftKings stock.

However, the chart clearly shows the stock also reclaiming the 10-week moving average and the $30 mark. Both metrics have been notable support in the prior two weeks and bulls will want to see that observation remain true in the weeks ahead.

If DraftKings stock can clear $37.50 (the 78.6% retracement), it puts $42 to $44 in play. Above that and a move to the all-time high is in play at $44.79, followed by the 123.6% extension at $52.86.

DraftKings can be a tough stock because, as you can see from the charts above, shares can be volatile. However, we have a clearly defined roadmap on how to proceed.

Below the major daily moving averages and the 10-week moving averages will put $30 back in play, followed by $28. Over $37.50 puts a move into the $40s on the table.