Roku Inc. ROKU shares were trading significantly lower Wednesday after MoffettNathanson analyst Michael Nathanson downgraded the stock from Neutral to Sell and lowered its price target from $330 to $220.

Roku was down 11.43% at $244.87 ahead of the close. 

Roku Daily Chart Analysis

• Shares saw a large dip Wednesday and now are nearing a possible support level in what technical traders call a sideways channel pattern.
• The stock previously found resistance near the $240 level before it was able to break above the level and begin to hold it as support. It then went on to push up to the $480 level before finding resistance. Now falling back lower, the stock may find support at this previous level of resistance near $240.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock’s sentiment has been bearish.
• Each of these moving averages may hold as an area of resistance in the future.
• The Relative Strength Index (RSI) has been pushing lower the past few weeks and now sits at 23. This is well into the oversold area and is showing the stock is seeing much more selling pressure than buying pressure.

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What’s Next For Roku?

Bullish traders are looking to see the stock bounce at support and begin to form higher lows and back back higher once again. Bulls are then looking to see the stock be able to cross above the moving averages for sentiment to turn bullish once again.

Bears look to be in control of the stock at the moment and would like to see it continue to push lower. A break below support with a period of consolidation below it is what bears are looking to see, as it may bring a further bearish push at some point in the future.