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Uber Bulls Are Back and the Charts Point to More Upside

Uber is rallying on better-than-expected earnings and the bulls are back in control. Here's how to trade Uber now.

Uber  (UBER) - Get Uber Technologies, Inc. Report shares were ripping higher on Friday, up 9% as investors bid the stock higher after the company reported its fourth-quarter results. 

Both earnings and revenue came in ahead of expectations, while management signaled that Uber could become profitable on an EBITDA basis sooner than previously expected.

It’s worth mentioning that Lyft  (LYFT) - Get Lyft, Inc. Class A Report shares also were rallying more than 2% after Uber’s report.

One of the biggest worries among investors has been Uber’s eventual profitability. In essence, could the company make money and remain competitive at the same time?

For now, investors are buying into the idea that it can, and with that are pushing shares higher. It’s also got Real Money taking a closer look at Uber as its Stock of the Day

Here's also what Wall Street's saying now as we turn to the charts.

Trading Uber Stock

Daily chart of Uber stock.

Daily chart of Uber stock.

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In November, we noted that Uber stock was outperforming despite negative news. That was the first bullish sign, which played out in the stock over the next few months. In January, we noted the breakout over $35, arguing that this level now needs to act as support and that a move over $36.31 puts $40-plus on the table.

On the subsequent pullback from that article, $35 did act as support and now Uber is hitting $40 on Friday. Is $40-plus still on the table? It most certainly is.

I want to see if Uber stock can continue higher from here, hitting $42.50, the 78.6% retracement of the 52-week range. Above that puts the $45 IPO price on the table. It’s pretty clear that bulls are - and have been - in control of Uber stock. Now they need to keep it that way.

If they don’t, we need to consider some downside targets.

If Uber stock can’t hold up above $40, the 61.8% retracement at $38.87 is on the table. That’s a very tight range to hold, but if it’s lost it puts short-term uptrend support (thin blue line) and the 20-day moving average on the table.

If that fails to hold - for instance, amid a market-wide correction - look for the 50-day moving average to hold as support. Below puts Uber’s longer term uptrend support mark (thick blue line) and 200-day moving average on the table.

Here’s the bottom line: Uber bulls are in control of the stock now. Over $40 puts $42.50 on the table, with the IPO price possible above that. On a pullback below the 61.8% retracement, see that the 20-day moving average buoys the share price.