Carvana Levels to Watch as Stock Jumps 20% on Strong Earnings, Outlook Boost

Carvana (CVNA) shares soared in extended trading on Wednesday after the online car dealer blew past Wall Street’s third quarter estimates and raised its full-year outlook, boosted by strong vehicle sales.

The company said it expects 2024 earnings to come in significantly above its prior forecast of $1 billion to $1.2 billion, supercharged by an increase in retail vehicle sales between the third and fourth quarters.

Carvana shares rose 20% to $248.99 in after-hours trading. Through the close of regular trading hours Wednesday, the stock had risen nearly four-fold since the start of the year.

Below, we take a closer look at the technicals on Carvana’s weekly chart and locate several key post-earnings price levels likely to attract attention.

Rising Wedge Breakout

Since bottoming out in December 2022, Carvana shares have traded within a rising wedge, a chart pattern featuring two upward sloping converging trendlines.

More recently, the stock has reclaimed the 200-week moving average and threatened to break out above the pattern’s upper trendline. That move looks set to occur on Thursday, with the price poised for a decisive breakout after the company’s better-than-expected quarterly results.

Let’s identify three key post-earnings overhead levels on Carvana’s chart and also point out a crucial support area to monitor during retracements.

Key Overhead Levels to Watch

The first important overhead level to eye sits around $240, an area where the shares may run into selling pressure near multiple peaks and troughs on the chart between August 2020 and May 2021.

A convincing close above this key technical level could see the shares climb to the $300 area. This region may encounter resistance around the psychological round number and a trendline that joins a range of comparable trading levels from January to November 2021.

Further buying may fuel a rally up to around $365, a location where investors could look to offload shares just below the prominent August 2021 peak and stock’s all-time high (ATH).

Crucial Support Area to Monitor

Given the relative strength index (RSI) sits poised to flash its highest reading since 2018 after the post-earnings jump, the stock remains prone to profit-taking.

During retracements, investors should closely monitor the $165 level, a location on the chart where the shares would likely attract buying interest near the September 2020 pullback low and January 2022 countertrend high.

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As of the date this article was written, the author does not own any of the above securities.