Shares of CSX  (CSX - Get Report) are hitting the brakes, tumbling over $8 per share to $71.38 on Wednesday morning. The 10.2% decline deals a blow to the bulls at a time where investors saw the stock nearly hit new 52-week highs on Tuesday.

Causing the decline? Earnings.

The firm's second-quarter earnings of $1.08 per share missed estimates by 3 cents per share. Worse, though, CSX missed on revenue estimates, reporting sales of $3.06 billion. That came up short of consensus expectations by $80 million and declined 1% year-over-year.

Even worse yet, CSX cut its full-year guidance. Management now sees a 1% to 2% decline in revenue, implying sales roughly in the range of $12 billion to $12.13 billion. That's sharply below analysts' current expectations for $12.45 billion.

The decline is having a knockoff effect, with Norfolk Southern (NSC - Get Report) falling 5.6% in morning trade, while Kansas City Southern (KSU - Get Report) is down 4.2%.

While CSX has improving operating metrics -- with efficiencies and margins increasing -- investors aren't happy about the top- and bottom-line shortcoming. Nor are they happy about the outlook cut, and frankly, who can blame them?

Buying the dip may be hard to do on a decline like this, particularly when the fundamental situation clearly isn't as strong as investors had thought. Let's take a closer look at the charts.

Trading CSX Stock

Daily chart of CSX stock.
Daily chart of CSX stock.

Specifically, $74 has been a key area over the past six months. Broadly speaking, the $74 to $75 area has been key over the past year. Just an hour into Wednesday trading, CSX stock has already traded more than 3 times its average.

On the upside, it's clear that $80 is resistance, but that level is so far off right now it's practically irrelevant.

Working in bulls' favor is the low-risk setup of CSX stock. Not that there isn't risk in the name, but buying into support gives investors a very quick right/wrong approach. Either support will hold and investors can stick with the name, or support will fail and they can bail.

In the case of CSX stock, the 200-day moving average at $71.94 has to hold. If it does, we need to see shares reclaim the 38.2% retracement for the one-year range at $72.23.

If it can, the first upside target is $74 to $75. Above that and its 20-day moving average is the next upside target. If the $74 to $75 area is resistance at first, we need to see which level gives way next (support near $72 or resistance near $74-$75).

If the 200-day fails as support, the 50% retracement at $69.60 is the next downside level, followed by the 61.8% retracement at $66.97.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.