ARK Innovation ETF (ARKK)) Price Forecast: Dual Bearish Patterns Threaten Deeper Decline

Major Top Forming After July Peak

There are two bearish patterns in the ARK Innovation ETF (ARKK), an actively managed ETF focussed on disruptive technology, such as AI, robotics and genomics. Each pattern points to a likely continuation of a decline that began following the July peak of $92.65. That high completed a 61.8% Fibonacci retracement of an internal downswing and almost reached a 50% retracement of the full decline that begun from the February 2021 high of $159.70.

A head and shoulders top pattern subsequently formed and a breakdown below the neckline at $70.44 triggered on February 4. Initial support appeared at a low of $65.98, which completed a 50% retracement of the prior upswing. Together, the topping formation and retracement resistance reinforce the broader bearish context established after the July peak.

Moving Average Resistance Caps the Bounce

The resulting bounce briefly reclaimed the neckline before reaching a high of $75.68 last week. As can be seen on the weekly chart, resistance appeared at the 10-week moving average. That 10-week average was again confirmed as resistance with this week’s lower weekly high and inside week at $74.55. On the daily chart, resistance was also evident near both the 200-day moving average and 50-day moving average, and the faster 50-day has crossed below the 200-day – a bearish momentum signal.

 Rising Bearish Wedge Triggers Near Key Support

A rising bearish wedge formed during the counter-trend rally, and it triggered to the downside this week with an initial drop below the lower trendline of the pattern at $71.28. This has left ARKK sitting near a significant support zone referenced by confluence of the pattern neckline, the 50-week moving average ($72.19), a top boundary line for a large rising trend channel, and the lower line of the wedge.

The rising wedge formed during the first pullback after a break of key support, a setup that often precedes another leg lower. A new bearish signal will be generated on a drop below this week’s low of $70.12 and further below last week’s low of $69.91. Such a move would provide a second breakdown signal for the topping formation and put ARKK back into a large rising trend channel.

Lower Targets Come into Focus

Once confirmed with a daily close below this week’s low, the bearish continuation would place lower targets in view. An initial lower target zone is from $59.37 to $58.91, consisting of a 61.8% Fibonacci retracement of the prior upswing and a measured move calculated from the wedge pattern. Below that lies the head and shoulders minimum measuring objective at $53.53.

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