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How to Trade Fastly After Earnings - Here’s What the Charts Say

Fastly stock has pulled back hard ahead of earnings. Is that good enough for buyers to step in? Let's look at its key levels on the chart.

Fastly  (FSLY) - Get Fastly Inc. Class A Report took Wall Street by storm in 2020, with shares erupting from roughly $10 near the low to more than $135.

While the initial ride higher was a joyous one for bulls, it’s been a bit bumpier since.

Due to political issues with the U.S. government and the prior administration, TikTok felt compelled to leave Fastly as its edge provider. At the time, it didn’t know if it would be forced out of the U.S. so it had to account for those risks.

This hurt Fastly, as TikTok was its largest customer. That led to increased volatility, as you’ll notice on the chart below.

Surprisingly though, Fastly has done a great job maintaining its explosive gains from earlier this year.

With earnings on deck for after the close of trading Wednesday, investors are wondering how the stock may react. Is it a buy? Should they avoid it? Let’s look at the chart and be prepared for when the stock makes its move.

Trading Fastly

Daily chart of Fastly stock.

Daily chart of Fastly stock.

Look at some of the big gaps in Fastly stock, with harrowing drops in August and October. This is the type of price action that makes investors hesitate with certain growth stocks.

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But with increased volatility comes increased potential.

Fastly stock had been trading pretty well until recently. In January, the stock filled the gap from October, but even after initially fading lower it continued to trend higher.

Now though, the stock is working on its fifth straight daily decline. Amid the current decline, shares are down about 20%. For some investors, enough risk has been sucked out of the stock from this pullback to justify a long position ahead of earnings.

For more conservative traders, they will want to see the reaction before they place their trades.

For now, the 100-day moving average is acting as support. Shares are also dipping into uptrend support (blue line). 

It’s a bit concerning that Fastly's VWAP measure and 50-day moving average provided very little support. However, with the 100-day holding up now, the hope is that it will continue to do so. 

If it fails, it will put the 200-day moving average in play, followed by range support between $73 and $76. Below all of these marks and the November low could ultimately be in play near $62.

On the upside, bulls certainly want to see Fastly reclaim its 50-day moving average. But it would be even better for it to reclaim the 10-day moving average and the 61.8% retracement.

Above that measure could put the $117 to $120 resistance zone on the table, followed by a potential run to the highs at $136.50.