A week ago, I put out a piece on InvestorPlace which broadly said that after a 160%-plus rally in under three months, shares of streaming company Roku (NASDAQ:ROKU) were due for a pullback. The thesis: ROKU stock is a long-term winner, but stocks don’t go up in straight lines forever, and Roku shares are nearing big technical resistance levels in the mid-$70’s after coming very far, very fast.

Fast forward a few days. We are getting that big pullback in Roku stock. Yesterday, shares dropped big on a pair of Wall Street downgrades which cited valuation and competition concerns. Naturally, following this big pullback, the question surrounding ROKU shares becomes: what now?

For starters, I wouldn’t pay much attention to the analyst downgrades. Competition concerns don’t hold water in the big picture. Valuation concerns are legitimate but they’ve been largely fixed by the recent 15% haircut investors gave to Roku stock.

Meanwhile, I would pay attention to two things: the big picture fundamentals and the technicals. Broadly speaking, the big picture fundamentals remain healthy, and support huge long-term upside in ROKU stock. Meanwhile, the technicals imply that the shares could bottom around $60. But, if they fall through the $60 floor, the next big level to watch for is $50.

As such, I think now is a good time to start adding exposure to Roku stock again. Dip in your toes here. See if the $60 level holds. If it does, stick with the rally. If not, trim, and wait for $50. Long term, this stock is only going higher.

Big Picture Fundamentals Remain Healthy

Both Loup Capital and Macquarie downgraded Roku stock on March 13, and that pair of downgrades sparked the big selloff. The tone of each analyst team was largely similar and went something like this: the stock has come very far, very fast, and is overvalued considering the plethora of competition risks on the horizon in the ad-supported video on demand (AVOD) space, including Apple (NASDAQ:AAPL).

Although those downgrades have some merit, they lack credibility in the big picture.

In that big picture, Roku is over-the-top (OTT) video access aggregation and curation. This has more and more value as the number of OTT video consumers and suppliers increases. Suppliers need Roku to reach an increasingly large and diverse consumer base; consumers need the platform to access an increasingly large and diverse supply of streaming services.

In this sense, while some analysts think that new streaming services from Apple and Disney (NYSE:DIS) are a negative for Roku stock, they aren’t. Sure, they create greater competition in the AVOD space. But, those services will also have to be streamed through Roku if Disney and Apple want to maximize reach. With a nearly 30 million — and rapidly growing — OTT video watcher base, Roku has unprecedented reach in this space. In fact, ahead of Apple’s big streaming service launch, Apple and Roku have “nearly finalized” a deal to extend Airplay capability to Roku devices.

Any dollars Roku loses in the AVOD space, it will win back in revenue sharing AVOD, TVOD (transaction video on demand), and SVOD (streaming video on demand) dollars. That is the inherent value of an aggregation and curator. Roku doesn’t need to win every market. They just need to win the reach battle, become an irreplaceable centralized access point, and monetize through revenue sharing.

That’s exactly what Roku is doing. As such, the big picture fundamentals underlying Roku stock remain favorable.

Pay Attention to the Technicals

Because the big picture fundamentals remain favorable, investors should pay attention to the technicals for clues as to when to buy the dip in Roku stock.

Long story short, $60 could be a good entry point. During the big early 2019 rally, Roku stock blew way ahead of its moving averages. Now, it’s retreating back to those levels, the closest of which is the 20-day moving average at $60. Roku stock appears to have held this technical level in the short term. If it can hold this level for the next several trading days, then it looks like the worst of this selloff is already over.

That may not happen. ROKU stock may continue to fall, evening dropping below the 20-day level. If so, the next line of defense comes in at $50, which is where both the 50- and 200-day moving averages currently sit.

The game-plan here is simple. Test the waters at $60. See if that level holds. If so, buy into the rally. If not, trim, and wait for support at $50.

Bottom Line on ROKU Stock

Roku stock is a long-term winner supported by the thesis that the company is turning into a dominant OTT video service aggregator and curator. So long as those fundamentals remain healthy, ROKU stock will be a buy-the-dip stock at critical technical levels. We are closing in on one such key technical level at $60. As such, now seems like a good time to cautiously and slowly buy the dip in these shares

As of this writing, Luke Lango was long ROKU.