Shares of Robinhood (HOOD) have weakened after a huge 422% rise since April 2025. Technical analysis suggests the price may drop to $120 per share, influenced by a reversal pattern and a tight price channel. This bearish sign appeared at the channel’s top, and even though the market has been rallying, HOOD shares have not gained. A fall to $120 could test the stock’s strength, particularly since comparisons with other trading platforms raise concerns about its valuation.

Challenges Facing Robinhood

HOOD has a strong following among retail traders, but it faces a tough market. The company’s valuation is very high, and there’s a risk that its price could drop below $100. Other market trends also stand out, with gold trading above $4,100 per ounce and Ripple (XRP) holding steady at $2.40. The EUR/USD and GBP/USD pairs are also experiencing fluctuations due to global economic uncertainties. Ripple’s derivatives are stabilizing after recent ups and downs. Experts like Karim AbdelMawla believe that the crypto bull market may continue for another six to twelve months. Robinhood shares seem exhausted after their sharp rise since April. A bearish signal appeared on October 6th at the top of its price channel, indicating that momentum has faded. Despite the broader market rally, HOOD has struggled to gain ground, which is a strong sign of weakness.

Strategizing Robinhood Investments

For traders, this suggests buying put options to profit from a possible drop to the $120 target. Options set to expire in November or December 2025, with strike prices around $150 or $140, could be a good move. This strategy directly bets on the potential for a significant pullback in the coming weeks. This technical weakness is supported by concerning data. Recent Q3 2025 reports showed that monthly active users remained around 15 million, not growing for the first time since the earlier rally. Additionally, the price-to-earnings ratio is over 90, significantly higher than competitors like Charles Schwab (SCHW), which trades at about 22. Given the stock’s sharp rise, implied volatility is high, making puts costly. A safer approach might be to use a bear call spread, where we sell a call option and buy a more distant out-of-the-money call to limit risk. This strategy profits if the stock stays steady or declines and benefits from high volatility. It’s important to note that HOOD’s weakness comes even as the Dow Jones continues to rise. This divergence is a classic bearish signal, indicating that money is shifting out of high-flying stocks like Robinhood. The overall market’s strength does not excuse HOOD’s inability to rally, which strengthens the bearish outlook. Create your live VT Markets account and start trading now.

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