ARKK Stock Forecast: Cathie Wood’s ETF Could Soar From A Valid Range Breakout
Following significant losses incurred after 2020, Cathie Wood’s ARK Innovation ETF has experienced an extraordinary recovery in 2023, surpassing the gains of the Nasdaq-100 and continuing its ascent. Let’s look at some technical analysis and sentiment to make our ARKK stock forecast.
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ARKK Stock Forecast: ETF Overview
Recent data indicates that ARK Innovation ETF increased by more than 34% in the fourth quarter of 2023, representing the fund’s most robust quarterly performance of the year. This surge has increased the stock’s annual gains to approximately 71% as of the close of trading on the last day of 2023.
The actively managed fund, supervised by Cathie Wood, the founder of ARK Investment Management, is recovering from a substantial 67% decline in 2020 and a 24% decline in 2021.
According to portfolio information accessible on ARK’s website, the fund had Coinbase Global Inc., Tesla Inc., and UiPath Inc. among its largest holdings.
The remarkable ascent of the ARK Innovation ETF during 2023 has exceeded the gains exhibited by the Nasdaq-100 index. This benchmark is predominantly technology-oriented and intended to reflect expansion and innovation. The investment motif of ARK’s fund is a disruptive innovation in particular.
If you want to join the possible bull run in ARK Innovation ETF, it would be the right time as the current price formed a bullish-pre breakout structure at the beginning of 2024.
Let’s see the upcoming price direction of this trading instrument from the ARK Innovation ETF technical analysis:
ARKK Innovation ETF Weekly Chart Shows A Bullish Pre-breakout Structure
The broader market direction in the ARK Innovation ETF (ARKK) is corrective, as the recent price remains sideways after a massive bearish trend.
In this context, the long-term HODLing approach could be from the current zone as a bullish range breakout could initiate a bull run in 2024 or 2025.
Moreover, the recent resistance at the 54.08 level suggests double top liquidity, which indicates that there might be sufficient retail liquidity above it.
In the monthly chart, the current consolidation remains within the broader bull run, with the December close above the 20-month EMA level.
As the current candle hovers above this crucial dynamic level, a bull run might come in 2024 after overcoming the 54.00 psychological level.
Coming to the weekly chart, the upward slope in the dynamic EMA suggests an immediate buying pressure; it needs more confirmation from other indicators.
Looking at the Relative Strength Index, the current readings suggest ongoing buying pressure as it remains above the 50.00 line. Also, the RSI has yet to move beyond the 70.00 line, suggesting that the price has more room to take the price higher.
Based on this outlook, the first possible scenario is the range extension as a bearish weekly candle formed from the 54.08 resistance level.
The downside correction could reach the 40.99 to 33.75 demand zone in that case.
On the bullish side, a bullish rejection from the above-mentioned demand zone could offer a long opportunity.
On the other hand, an immediate bullish reversal with a candle close above the 55.00 level could initiate an impulsive bull run in 2024, where the next resistance would be at the 125.69 level.
See related stock forecasts for: $RIO | $LULU
ARKK Ichimoku Cloud Analysis: A Bullish Trend Reversal
In the weekly Ichimoku Cloud structure of ARKK, the primary bullish wave is visible as the future cloud shifts the direction towards the upside. Moreover, multiple bullish weekly candles are visible above the Cloud support.
In the Average Directional Index (ADX) indicator, a corrective movement has been visible since the beginning of 2023, where the most recent reading suggests a bullish trend formation.
Usually, a bullish slope in ADX above the 20.00 line is considered an impulsive trend but needs a clear confirmation from the price chart.
For ARKK, the stable market above the Cloud support with the bullish slope in ADX suggests a possible continuation of the bullish trend in 2024. Moreover, the bullish crossover between Tenkan Sen and Kijun Sen suggests a confluence bullish signal, which could increase the price toward the 100.00 psychological level.
On the bearish side, a downside correction is possible below the 40.00 psychological level, but a bearish weekly close below the 33.64 level might initiate a deeper correction towards the 28.00 level.
ARK Innovation ETF Awaits A Correction Before Another Bull-run
In the daily chart of ARKK, a strong buying pressure is visible from the Golden Cross formation in December 2023.
When the 50 EMA crosses over the 200 SMA, we may consider it a Golden Cross, which is a strong bullish signal. For ARKK, the recent price trades above the 50-day EMA, where a Golden Cross continuation strategy could offer a decent long-term opportunity.
In this structure, the primary support is at the 50-day EMA. Therefore, if the price comes below this line, we may expect a rebound with a V-shape recovery before aiming for the 70.00 psychological level.
On the bearish side, a daily close below the 39.20 high volume level could initiate a deeper correction in 2024, which might need a bit more time to anticipate a rebound.
Is ARKK Innovation ETF A Buy?
Based on the current market outlook, the long-term market view shows a promising investment opportunity in this ETF, which may result in a new higher high formation before 2025. In that case, a stable market pressure with a rebound in the daily price is needed before joining the long-term bull run.
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