Quick Take Technical Analysis: Activision Blizzard, Inc

Activation Blizzard, Inc ATVI gapped down over 14% following a third-quarter earnings miss and a holiday-season outlook falling short of consensus. The company also delayed the release of of two highly anticipated games.

• Between Nov. 12 and Nov. 16, Activation Blizzard attempted to fill the upper gap but ran into a resistance level at $72.20 and was unable to break through it.
• The stock then entered into a steep downtrend before bouncing up off a support level on Dec. 3 near the $56.28 level.
• The downtrend caused Activation Blizzard’s relative strength index (RSI) to plummet toward the 21% level. When a stock’s RSI reaches or exceeds the 30% level it becomes oversold, which can be a buy signal for technical traders.
• Between Dec. 3 and Dec. 8, the stock bounced up about 6% and on Thursday looked to be consolidating the move with an inside bar on low volume. The inside bar pattern leans bullish because the stock was trading higher before making the pattern.
• There is a possibility Activation Blizzard is forming a bull flag pattern on the daily chart. Traders will want the stock to continue to hold above the eight-day exponential moving average (EMA) as it consolidates with in the pattern. If Activiation Blizzard breaks up from the flag formation, traders will want to watch for high volume to confirm the pattern was recognized.
• Activation Blizzard has resistance above at $61.65 and $64.53 and support below at $58.72 and $56.28.

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