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DoorDash Stock Gaps Into Resistance — How to Trade It?

DoorDash stock is hitting its highest levels since February -- and it's running into resistance. Here's how to trade the stock now.

Shares of DoorDash  (DASH) - Get DoorDash Report have been on a powerful run, particularly against the backdrop of the overall market.

On Thursday, the stock gapped higher, hitting its highest levels since February. Growth stocks were on fire around this time before rolling over and getting mauled in a brutal bear market.

At least part of the stock’s gains on Thursday can be attributed to a Bank of America upgrade.

Shares of DoorDash are up in seven of the past nine sessions. For comparison, the S&P 500 is down in seven of the past nine sessions with Thursday’s current drop of 0.65%.

For DoorDash, that’s called relative strength and it’s something traders look for during marketwide corrections.

Last week, DoorDash, Uber’s  (UBER) - Get Uber Technologies, Inc. Report Eat unit and GrubHub  (GRUB) - Get Grubhub, Inc. Report sued New York City over its fee caps.

Yesterday, DoorDash filed another lawsuit against the city.

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Trading DoorDash Stock

Daily chart of DoorDash stock.

Daily chart of DoorDash stock.

DoorDash stock is working on its fourth straight weekly gain and its sixth weekly gain in the past seven weeks. It’s done very well over the past few months since bottoming in May.

The stock is trading above all its major moving averages. It's clear that the trend favors the bulls. So does the recent relative strength.

The shares pressed over the 61.8% retracement, settled into the 10-day moving average and finally ripped over $210 resistance.

Now, though, DoorDash stock is gapping right into the $215 to $225 resistance zone. Not to mention it’s fading from the 78.6% retracement.

From here, let’s see how DoorDash stock proceeds. If it fades lower, let’s see that the $210 area and the 10-day moving average step in as support. 

If these measures fail, the $200 level is in play, along with the 21-day moving average and the VWAP measure.

On the upside, a close above the 78.6% retracement could open the door to $240-plus, potentially putting the all-time high in play near $256.