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Trading Robinhood: Is It Becoming a Meme?

Robinhood shares are exploding higher as it becomes a meme stock. Let's look at the charts and potential levels.

Robinhood  (HOOD) - Get Robinhood Report stock has been all over the map since going public last week.

The company went public last Thursday, opening at its $38 initial public offering price and trading to as low as $33.35 on the first day, down more than 12%.

Shares ended up settling lower by 8.4% from the opening price on its first day of trading, but Robinhood has closed higher each day since.

On Tuesday, Robinhood finally reclaimed its $38 IPO price and rallied more than 24% on the day. It was an impressive showing, but nothing like Wednesday.

After opening higher by roughly 16%, the stock climbed more than 80% at one point on the day. Despite multiple haltings, shares are still up around 50% on the day.

With the move, Robinhood is getting the “meme treatment,” joining other Reddit favorites like GameStop  (GME) - Get GameStop Corp. Class A Report and AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report. What does that mean for the stock going forward?

Trading Robinhood Stock

Daily chart of Robinhood stock.

Daily chart of Robinhood stock.

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First, trading a recent IPO is hard enough. “Meme-ing it” only makes trading it more difficult and for many traders, that will make Robinhood a no-touch.

Not to mention, it’s still too early to have a large trading range, oscillators or moving averages. That makes it even more difficult for most traders. 

After exploding higher on the day, the stock finally topped out at $85. Falling from that area now, let’s keep an eye on the $65 area, which is the 61.8% retracement for the entire current trading range.

Below that and today’s low at $54.40 is vulnerable. If Robinhood pulls back below that mark, the $50 level and the gap-fill near $48.50 is on the table.

Without getting into too many numbers and levels, that scenario puts the “Day One” high in play at $40.25, followed by the lows at $33.35.

On the upside, $85 is the key level. Another run to or above that level and a failure to close above it could cement it as resistance. 

Above $85 and $100-plus becomes a potential upside area of interest.

Again, Robinhood is a newly issued stock and therefore it’s subject to heightened volatility. With the meme potential, it could create even more volatility. So don’t feel tempted to trade this name without a solid risk/reward plan.