Roblox Follows Its Technicals Soaring Higher As The Stock Advances Into The Metaverse - Roblox (NYSE:RBLX

Roblox Corporation (NYSE:RBLX) finished filling a lower gap on Monday, providing a solid entry for a bullish position, just as Benzinga called out on Jan. 4.

On CNBC’s "Mad Money Lightning Round," Jim Cramer on Monday highlighted Roblox for being an excellent way to play the metaverse. As various big tech companies such as Microsoft Corporation (NASDAQ:MSFT) and Meta Platforms, Inc (NASDAQ:FB) race to establish themselves in the metaverse space. Although Roblox has, perhaps, made the most advancement in the area so far.

Last year, Roblox began expanding its monetization of the metaverse by adding Roblox Listening Parties, collaborating with Nike, Inc (NYSE:NKE) to create NIKELAND within the platform and pairing with Ralph Lauren Corp (NYSE:RL) to launch its Winter Escape digital fashion collection.

Meanwhile, the stock has suffered a steep sell off over recent weeks after hitting a new all-time high of $141.60 on Nov. 22. Roblox is down about 37% since that date, but because of the company’s promising fundamentals and its technical outlook, the stock could offer solid gains in 2022 now that the gap has been filled.

The Roblox Chart: When Roblox filled the gap on Monday, bulls came in and immediately bought the stock, which caused it to close up above its opening price to print a hammer candlestick. On Tuesday, Roblox reacted to the hammer candlestick and was trading up over 4% higher.

Roblox is also trading within a falling channel on the daily chart, and on Tuesday was making its way up toward the upper descending trendline of the pattern. Conservative traders may wish to wait until Roblox breaks up bullishly from the channel on higher-than-average volume before making an entry.

Other traders may wait for Roblox to print a trend change, as the stock is currently still in a confirmed downtrend. When Roblox eventually tops out on its current bullish move north, traders can expect the stock to print a higher low, as long as Roblox doesn’t fall through Monday’s low-of-day price on the retracement.

Roblox is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish. Roblox’s next course of action will be regaining the eight-day EMA as support.

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Bulls want to see sustained big bullish volume push Roblox up over the eight-day EMA, and then for continued momentum to help the stock break up from the falling channel. Roblox has resistance above at $93.52 and $103.87.
Bears want to see big bearish volume come in and push Roblox back down toward the lower descending trendline of the channel, which will cause the stock to print a lower low and confirm the downtrend is still in play. Roblox has support below at $83.41 and $76.83.