Chewy Inc. CHWY shares are trading lower Friday after the company reported third-quarter earnings results. The company reported a quarterly loss of 3 cents per share, beating the analyst estimate calling for a loss of 5 cents per share. The company reported quarterly sales of $2.21 billion, which met the analyst estimate.

Chewy was down 9.57% at $50.91 Friday afternoon.

Chewy Daily Chart Analysis

• Shares saw a large gap lower in what traders would call a downward sloping channel. Connecting the highs shows the downward trend, and taking a line parallel and connecting it to the lows shows the channel. These areas have been able to hold as support and resistance in the past and may continue to in the future.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue). This indicates bearish sentiment, and each of these moving averages may hold as an area of resistance in the future.
• The Relative Strength Index (RSI) continues to push lower as it has for the past month and now sits at 25. This shows that sellers continue to pile into the stock and have pushed the RSI into the oversold area, an area of strong selling.

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What’s Next For Chewy?

As the stock sits below the moving averages and continues to fall in the downward channel, it shows that bears are winning the battle. Bears are looking to see the stock continue to fall in the channel and hold below the moving averages.

Bulls are looking to see a bounce and for the stock to be able to push higher and cross the pattern resistance. If resistance can be crossed the stock may see a change in long term trend.