Affirm (AFRM) has fallen about 20% over the past 251 trading days. In the same stretch the XLF financial ETF rose 6.7%. Within the buy now, pay later group, AFRM sits in the middle: it beats SoFi (SOFI) and Upstart (UPST) but trails Block (XYZ) and newer entry Sezzle (SEZL).
Price action and levels
AFRM pushed higher after its last earnings report, printing a large up candle. That gain faded through the day. Price did not clear the prior highs near $92, but it opened around old highs near $86. A downward sloping trend line stays the main pattern, and it has steepened into a sharper channel pointing lower.
Key horizontal levels: recent lows near $72, a repeated floor near $70 that price has climbed back above, and a gap near $67.50 that has now filled.
Moving averages and momentum
Price held at the 251-day exponential moving average, which stands in for one trading year, sitting at $67.70. As of Friday, AFRM crossed above its 5-day EMA. The 21-day and 63-day EMAs are stacked on top of each other near $73.50. A move up to that point would break the channel and push above both of those medium-term averages at once.
RSI has been sliding, and it sits below the 50 midline under its own downward sloping trend line. The bullish signal to watch: a break above both that RSI trend line and the price trend line at the same time, with price making new relative highs.
Volume profile
The heaviest trading area runs from $65 to $78, the biggest volume node on the chart. It holds the point of control near $71.79, right where AFRM closed Friday. Heavy volume also showed up after earnings even as price slipped from the $90s. Above current price, a smaller node sits around $82 to $85. On a break lower, there is significant activity down at $47 to $52.
The trade
Using the options market's expected moves: this Friday's monthly expiration, September 18th, prices in about plus or minus 5.3%. The November 20th expiration prices in about plus or minus 21.5%, which lines up roughly with the old highs near $90.
The example is a bullish position: buy one November 20th 80/90 call vertical for a 2.25 debit, 67 days out. Max loss is the 2.25 paid. Max profit is about 7.75, a risk-to-reward near 1 to 3.5. The break even is 82.25, about 12.7% above current price, which fits easily inside the 21.5% expected move. Reaching it is not guaranteed, but analyst activity has leaned a bit more bullish. This is a bet on continued upside over the next couple of months.
