Bed Bath & Beyond Decimated Following Bankruptcy Filing: A Technical Analysis

Bed Bath & Beyond, Inc BBBY reached another new all-time low on Monday after filing for Chapter 11 bankruptcy on Sunday.

While the company plans to begin closing its business, it’s hoping to find a buyer. In the meantime, Bed Bath & Beyond plans to use the approximately $240 million in debtor-in-possession financing it received earlier this month to provide liquidity through the bankruptcy process.

"We will continue working diligently to maximize value for the benefit of all stakeholders," said president and CEO Sue Gove.

Taking a bullish or bearish position in a company that has filed for bankruptcy is very risky. Going by the stock’s chart, however, BBBY looks headed lower, having been trading in a downtrend since Feb. 6.

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The Bed Bath & Beyond Chart: Bed Bath & Beyond’s most recent lower high within its downtrend was printed on April 19 at 56 cents, and the most recent confirmed lower low was formed at the 23-cent mark two days prior. On Monday, BBBY fell to new lows but was working to print a doji candlestick, which could indicate the next lower low has occurred, and the stock will bounce on Tuesday.

• The move lower on Monday came on higher-than-average volume, which indicates the bears are attempting to drag the stock lower. The doji candlestick suggests the bulls are fighting back, however, which makes a bounce the most likely scenario.
• If Bed Bath & Beyond bounces on Tuesday, bullish traders want to see the stock regain the eight-day exponential moving average, which has been guiding the stock lower since Feb. 7. Bearish traders want to see sustained big bearish volume continue to drive BBBY down to another new all-time low.
• The stock has resistance above at 23 cents and the 36-cent mark, and psychological support below at 15 cents and 10 cents.

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