What's Next After DraftKings Cracked The Uptrend It's In?

DraftKings Inc. DKNG shares traded lower Tuesday after short seller Hindenburg Research published a short report on the stock.

DraftKings was down 6% at $47.60 at last check. Below is a technical look at the stock.

DraftKings Daily Chart Analysis:

• Shares were climbing the past few months in an upward trending channel. The stock fell out of the channel today.
• The stock is trading below both the 50-day moving average (green), and below the 200-day moving average (blue), indicating sentiment in the stock is bearish.
• Each of these moving averages may hold as resistance, and the price may struggle to cross above these indicators.

Key Levels To Watch:

• The stock looks like it may have broken the uptrend it has been in by falling below support in the upwards channel.
• The bottom of the channel had previously acted as support while the top of the channel acted as resistance. Now that the stock looks to have fallen below the channel, the bottom line of the channel may hold as resistance.
• The Relative Strength Index (RSI) has been steadily moving down. This means the stock is becoming more oversold as time passes. The stock hasn't entered oversold territory yet, and may continue to move down as the RSI falls.

What’s Next?

Bullish technical traders would like to see the stock find support somewhere and make a bounce back up. If the stock can enter the channel again and start forming higher lows, the stock may change back to a bullish trend.

Bearish technical traders would like to see the stock continue to fall. Bears want to see the bottom of the channel continue to hold as resistance. Bears also want to see the stock continue to trade below the moving averages for the trend to remain bearish.