FansUnite (FANS.C) was a stock chart I covered on Market Moment a month ago. I was looking for a bottoming pattern, because the chart was displaying criteria for an EG trade set up. A reminder about my approach: you can use this to trade any asset whether they be stocks, bonds, forex, crypto or commodities. What we focus is on market structure, and FANS is a great display of our method. Members who are a part of our Discord trading room, have used the same strategy to trade stocks, forex, cfd’s and options.
Let us go over the fundamentals of FANS first, most of our readers are familiar with the company, but for an in depth coverage, I highly recommend reading Chris Parry’s article on FANS which can be read here.
In the article, Chris mentions the two catalysts: 1) Askott Entertainment merger began to take root, e-sports betting began to add to the offerings. 2) A jump in revenues.
Chris states:
As live sports paused for a few months and their Scotland-based McBookie sportsbook waned, a shift to new online casino games brought the revenues back. And as sports soon returned, McBookie saw sports betting revenues now landing in addition to the new casino revenues.
McBookie put out some record numbers:
The UK Sportsbook set company records with triple-digit growth in multiple areas, led by a
433% increase in overall revenue compared to October 2019 and a total Gross win of $602K
CAD during the month. Much of the growth was attributed to the unveiling of McBookie’s live
casino games and increased activity in sports betting which resulted in $7.3M in total betting
volume being placed during the month.
This earnings news came out on November 5th, and was the catalyst for the move to come.
The arrow points to the price action on the day McBookie earnings were released. This is what we call an engulfing candle. A candle which is larger and ‘engulfs’ the previous candle, and must be the opposite color. Where this printed is also highly significant. Engulfing candles are powerful reversal triggers, but they must print at major support zones. In my previous Market Moment article, I was looking for a bottoming pattern on FansUnite. Specifically, the double bottom pattern. Instead we got a range.
Now this is one of the important criteria for an EG trade set up. We know that ALL markets move in three ways: an uptrend, a range or a downtrend. Nothing moves up or down in a straight line forever. Charts move in cycles.
Knowing this, we look for charts with a prolonged downtrend which then begin to display signs of a range or a reversal pattern. Generally this happens at a previous support (price floor) zone, but if we are making new lows, we need to wait a few days for signs of a bottoming.
As you can see from the chart of FansUnite, we found support at 0.20. The range broke when price closed above my black line, or the 0.24-0.25 zone. And look at the breakout candle. A very strong green candle. This is ideal as it indicates the strength of the buyers and the breakout. However, price did not carry that momentum forward the next few days. In fact, price did what is expected on breakouts: it retested the breakout zone. We can see that buyers stepped in when price returned to retest the 0.24-0.25 zone, and then never looked back. Retests are something my readers are familiar with, and are a very important part of market structure.
The stock then shot up around 200% in three weeks, and has seen volume of over 1 million shares traded a day regularly!
The stock easily broke above my next resistance (price ceiling) levels. We took out 0.425 with ease, and initially, saw some sell off at previous highs at 0.525. But then to end last week, FansUnite took out previous highs and has continued the run today.
What is next for the stock?
Well the fundamentals for the company remain bright:
McBookie added new features, including bet builder, which enables on-line bettors to fully customize and build their bets across any number of markets, and instantly receive a price on their desired wager. The user friendly feature combined with a full slate of English soccer fixtures and the Scottish National Soccer Team’s presence in the prestigious UEFA European Championship qualifiers, helped propel the company to new financial heights.
But technically, I do expect to see some profit taking. Ideally, we would see price retrace back to retest the breakout at 0.525. What was once resistance, now becomes new support. This is where new buyers would step in expecting price to remain above and continue a new swing move higher.
If I were to put a fibonacci on the stock using today’s highs, this is what I would get:
Again, this is using today’s top. Ton confirm a fibonacci top, I need to see price pulling back from here. If we do, this fib stands. You can see the next targets would come in at 0.775, and then finally at 0.955.
So in summary, I will be awaiting for the pullback for an entry. Both the fundamentals and the technicals align with this play.
Full Disclosure: FansUnite is an Equity.Guru marketing client.
