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Robinhood's Guidance Disappointed. Buy the Dip?

Robinhood didn't wow investors with its earnings report or guidance. Here's how to trade the stock's pullback now.

Shares of Robinhood  (HOOD) - Get Robinhood Report are not trading too well on the day, down more than 10%.

The stock is off its session low, as the bulls attempt to buy some of the dip. But the post-earnings reaction is still not great, which isn’t surprising considering the miss we saw against consensus expectations.

Guidance didn’t help Robinhood’s case and the company’s results even weighed on Coinbase  (COIN) , given the blame the company put on crypto. 

The drop in cryptocurrencies like bitcoin and ethereum aren’t helping either.

During a busy earnings season, Robinhood is sticking out. Is it a dip to buy or a stock to avoid?

Let’s dig through the charts.

Trading Robinhood Stock

Daily chart of Robinhood stock.

Daily chart of Robinhood stock.

Robinhood stock’s IPO was met with some skepticism, as the chart above illustrates.

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However, it didn’t take long for this stock to get memed and scream higher above $80 a share.

That led to a falling wedge pattern. And while the stock broke out over resistance, it ultimately led to a series of lower highs.

The stock had been finding the “Day-One IPO High” of $40.25 to be support for several months, but it lost that support mark this week. 

Now that the stock is trading lower after the earnings report, we’re in a bit of no-man’s land, trapped in the stock’s IPO-day range.

There is a bit of divergence on the Williams %R reading, but we need more than that to justify a long position. We need some type of rotation or reversal. So far, there is none.

Given the weaker-than-expected results and the lackluster guidance, I wouldn’t be surprised to see more selling pressure.

If that’s the case, I’d love to see Robinhood stock trade down to the “Day-One IPO Low” at $33.35. For what it’s worth, this level was also support on the stock’s second day of trading.

If the shares break below this measure and reclaim it, we could have a reversal long to trade with a stop-loss just below wherever the new low comes into play.

If that setup doesn’t come to fruition, let’s see how Robinhood stock handles the declining 10-day moving average and this month’s prior low at $38.15, followed by $40.25.