On Nov. 15, Marathon Digital Holdings, Inc (NASDAQ:MARA) plummeted over 27% after the company disclosed it had received a subpoena from the U.S. Securities and Exchange Commission asking it to produce communications and documents related to its data-center facility in Hardin, Montana.
Between Tuesday and Thursday, the sell-off continued and Marathon Digital pulled back a further 13% to a low of $47.41 but this time in sympathy with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which have plummeted about 15% and 14%, respectively, since Sunday’s 24-hour closing prices.
On Friday, Marathon Digital was following Bitcoin and Ethereum into a bounce up from the lows, but the stock will have a lot of work to do before negating a bearish pattern and trend.
See Also: Is Marathon Digital’s Stock Overvalued Or Undervalued?
The Marathon Digital Chart: Marathon Digital hit a new all-time high of $83.45 on Nov. 9 but sold off 25% the following day after receiving a bearish reaction to its third-quarter earnings print. The dip was bought and over the course of Nov. 11 and Nov. 12, when Marathon reached a high of $76.83.
The Nov. 15 news-related sell-off, combined with the Nov. 12 high-of-day, have confirmed the stock is now trading in a downtrend with the most recent lower low printing on Nov. 18 at $47.41. In order to negate the downtrend, Marathon Digital would soar up over the $76.83 level. If Marathon Digital is not able to climb back up above the level, it is likely to eventually create another lower low or settle into a sideways pattern of consolidation.
There is also a possibility Marathon Digital could be setting up into a bear flag pattern on the daily chart, with the pole created between Nov. 15 and Nov. 18 and the flag formed between Thursday and Friday. Traders can watch for a break from the flag pattern on high volume to gauge whether the pattern was recognized.
If the bear flag becomes a recognized pattern, the measured move, calculated by taking the distance of the pole as a percentage and subtracting it from the top of the flag, is about 33%, which indicates Marathon Digital could retrace toward the $36 level in the future. The bear flag will become negated if the stock is able to regain the eight-day exponential moving average (EMAs) as support.
Marathon Digital is trading about 6% below both the eight-day and 21-day EMAs and on Friday, the eight-day EMA was beginning to cross below the 21-day, both of which are bearish indicators. The stock is trading above the 50-day simple moving average (SMA), which is bullish and on Oct. 18 the 50-day acted as support.
- Bulls want to see big bullish volume push Marathon Digital up over the eight-day EMA and a coinciding resistance level at $57.75. Above the level there is further resistance at $61.67 and $65.69.
- Bears want to see big bearish volume come in and drop Marathon Digital through the flag formation and down below the most recent lower low, which will cause the stock to lose support at the 50-day SMA. Marathon Digital has support at $54.11 and $48.90.
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Image: Marathon Digital Holdings