Rigetti Computing’s (RGTI) recent price action is a lesson in the importance of technical analysis, period.
On Tuesday, the stock closed 35% higher to post its first close back above $12.50 in a little more than a week. The move shifts the stock back into a strong short-term bullish trend after two weeks of volatility and a successful test of the stock’s most critical trading trendline.
Shares of Rigetti were rocked more than two weeks ago following comments from Jensen Huang. NVIDIA's CEO forecasted an extended timeline before the quantum computing industry generates effective game changing technology.
Shares of Rigetti dropped a total of 70% over the following five days, erasing a month’s gains of more than 200% from the stock’s price in December.
The fast and aggressive decline dropped Rigetti shares to their 50-day moving average. This is one of the most watch technical indicators for traders.
The 50-day moving average has become the best trendline to represent the saying “the trend is your friend”. This means a breach or move below this trendline will increase selling pressure on almost any stock.
The test of its 50-day moving average resulted in a successful “buy the dip” signal. Rigetti shares posted just one close below the trendline on January 13.
The immediate bounce from Rigetti’s 50-day drew massive buying volume into the stock. The large volume signals that investors have been looking for an opportunity to buy the stock at a discount from it’s recent highs of $20.
Today, shares crossed back above the $12.50 price, a significant psychological win for investors and traders.
The $12.50 price represents a psychological price level due to the slight resistance that the stock saw in December.
Today’s move back above this price, along with the successful technical test of Rigetti’s 50-day. That combination puts the stock back in the good graces of speculators aiming to get into the quantum computing industry early.
As always, investors should expect continued volatility from names like Rigetti and other quantum computing stock.
Rigetti Computing shares remain in their long- and short-term bull market trends with a target price of $25.