The move also comes after Activision and its peers have seen a sudden increase in volatility.
For starters, the stock market has seen an increase in volatility, making trading more difficult. Then gaming stocks were hit when video games were blamed as one of the reasons for an increase in mass shootings. There's also the fact that Take-Two Interactive Software (TTWO - Get Report) rallied big on its quarterly results.
Activision beat on earnings and revenue estimates, despite the latter declining 12.3% year over year. However, the company's outlook is giving investors pause on Friday.
The bad news is that shares were falling as resistance once again holds strong. The good news? Support is still in play.
Trading Activision Stock
After gapping lower in November, it took a long time for all of Activision Blizzard's moving averages to catch up. Ahead of earnings, ATVI stock was trading above all three major moving averages, while on Friday it's now struggling to hold the 20-day and 200-day moving averages.
Whether it holds or not doesn't make much of a difference. The key mark to hold at the moment is uptrend support (blue line). Below uptrend support and $45 puts $42.50 on the table. If that mark fails to hold, the lows near $40 are possible.
If support holds -- whether that's one of its major moving averages or uptrend support -- resistance between $49 and $50 is key (blue rectangle). If Activision stock can hurdle this very clear resistance zone, it puts a few upside targets on watch.
The first is the 61.8% retracement near $57. If ATVI stock can get there, it may also start to fill the gap back up to the $62.50 mark. That's the level from which Activision stock broke down from in November. Conveniently, that's also about where the 50% retracement is too.
So what do investors do from here?
Trading is essentially a series of "if-then" statements. If Activision stock can clear resistance, then its upside targets are on the table. If uptrend support fails, then its downside targets are a possibility.
The simplest setups are usually the best setups, and with ATVI that's exactly what we have. Either resistance will give way or support will fail. Once one of those two things happen, traders can take action.