Overview of Recent Performance

Carvana (CVNA) enjoyed a nearly 4% increase in share price on Tuesday, marking the culmination of a five-day upward trend. This surge followed an upgrade from Morgan Stanley, which highlighted the recent decline in the stock as a potential buying opportunity in the online automobile retail sector.

Despite the stock still being 24% below its all-time high reached last month, it remains remarkable 150% higher than its value a year ago, fueled by efforts to enhance profitability and reduce operational costs.

Trading Range and Consolidation Insights

In the period following its peak in late November, Carvana’s shares have been fluctuating within a narrow trading range, suggesting a phase of consolidation before a potential breakout. Recently, buyers stepped in just below the 200-day moving average, with the stock closing above this critical indicator last week.

The positive momentum is further underscored by the relative strength index (RSI), which has moved back above the key 50 threshold, indicating a shift towards more favorable price movements.

Price Levels to Monitor

Overhead Resistance Levels

Investors should pay close attention to the $265 mark, as this threshold has historically served as a resistance point, coinciding with notable price activity last November. If Carvana’s shares manage to move beyond this level, they could enter an uncharted territory. Utilizing technical analysis, an upside target can be projected at approximately $365 by applying the measuring principle to the trading range.

Support Levels for Consideration

During market corrections, the $165 level is vital as it is close to recent lows and previous retracement patterns observed in late September. A drop below this benchmark could raise concerns about a potential double top formation in the stock.

Additionally, a breach beneath the lower trendline of the trading range could see shares correct toward the $130 vicinity, an area that may present a buying opportunity based on historical price movements tracked from May to September of the last year.