Charter Communications is a large cable and broadband provider in the United States. Its share price fell from above $800 in August 2021 to about $240, around 70% below that peak.
An inverse head and shoulders pattern has formed on the daily chart after the long decline. The neckline has already been broken to the upside, which is the first confirmation of the pattern.
After a neckline break, a pullback towards the broken neckline is often watched as a retest area. The neckline is a descending trendline, so the retest level depends on when the pullback happens.
A retest that holds can turn the former resistance area into support. A bounce from that area is used as a confirmation that the pattern is continuing.
Another head and shoulders pattern nearly completed at the prior pivot low around April 2024. A 70% measured move was referenced, but the move reached about 30% before falling after earnings in April 2025.
We are watching a classic bottoming pattern develop in Charter Communications after a brutal multi-year decline. The stock has formed an inverse head and shoulders, and the break of the neckline suggests the long downtrend could be over. However, this technical signal is fighting against persistent fundamental headwinds, as reports showed the company lost another 61,000 broadband subscribers in its most recent quarter.
The broader challenge comes from relentless competition, which hasn’t slowed down since 2025. Data shows that Fixed Wireless Access from phone companies captured roughly 88% of all home internet net additions last year, putting a cap on growth for cable providers like Charter. This is the core issue that has kept investors away and the stock price suppressed.
For derivative traders, this presents a clear tactical opportunity with defined risk levels. Aggressive traders can buy May or June call options now to play the initial momentum from the breakout. More cautious traders should wait for the expected retest of the broken neckline, looking to enter on a bounce from that former resistance-turned-support level.
A major risk factor is the upcoming earnings report, expected in the final days of April. We saw a similar bullish pattern fail spectacularly on earnings in April of 2025, reminding us how a poor subscriber report can invalidate a technical setup. That event shows how vulnerable the stock is to its own fundamental news flow.
Given the earnings risk, buying debit spreads, like a bull call spread, could be a smarter approach than buying outright calls. This strategy caps the potential profit but significantly lowers the upfront cost and risk from a post-earnings volatility crush. It allows for a bullish position while respecting the binary nature of the upcoming report.
Alternatively, traders can wait until after the earnings announcement is out of the way. If the stock holds the neckline support through the news, it would provide a much stronger confirmation that the pattern is valid. This would be a higher-probability entry point, even if it means missing the initial move.
