Put Salesforce.com on Your Radar

 | Mar 05, 2014 | 9:00 AM EST  | Comments
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crm

I like the buy side of Salesforce.com (CRM) for a few reasons. First, the stock price is currently above both the 200- and 50-day simple moving averages. Second, shares recently saw a symmetrical pullback into a key price support level -- and this has been followed with initial buy triggers on both the 15- and 30-minute charts.

Salesforce.com (CRM) -- Daily
Source: Dynamic Trader

As far as the support is concerned, I see a confluence of at least seven Fibonacci price relationships at the March 3 low -- which was $59.82 -- with a cluster that came in at the $58.56-to-$59.77 area. These include at least three Fibonacci price projections of prior declines, along with multiple price retracements of prior swings. I also see a 1.618 extension of a prior swing that overlaps beautifully.

A cluster of at least three Fibonacci price relationships constitutes a good trade setup. When you see seven or more price relationships, it tells you to pay special attention to the zone. This isn't because the zone will definitely hold -- as this is never certain -- but because you know it is a very important make-or-break decision.

Well, so far this one is holding in Salesforce.com. If the stock continues to hold above the recent low at $59.82, the initial upside target will come in at $68.95, and target 2 is $71.44.

I'll be stalking a pullback to this last low for an entry in the next couple of sessions. Also, if the last low is somehow violated, I will still look at a retest of the $58.56-to-$59.77 area as another opportunity for a buy, with my risk defined below this same key zone. If this same key zone is taken out, I will back off the buy side until further notice.

Please refer here for more information on trade triggers, and here for general guidance on Fibonacci trade setups.

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