Callidus Software: Look to Buy an Upside Breakout

 | Apr 17, 2017 | 3:24 PM EDT
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It is important to remain patient and wait for the right opportunities. One could easily go long Callidus Software  (CALD) at the market but it takes some thought and patience to go long CALD on strength above $21.65 or a trade above $22. I like to have the market tell me that I am trading in the right direction.

I will buy dips but I prefer to go long on strength. Let's look over the charts and indicators on CALD and hopefully you will see why I am awaiting a breakout to go long.

In this daily bar chart, above, we can see that CALD has made several attempts to break above $21.50. Every rally has failed so far. We do have a rally in place from early December but the health of the uptrend needs a new high for the move up. Prices are below the rising 50-day moving average line but above the rising 200-day average line. The On-Balance-Volume (OBV) line has been generally bullish and rising from early November.

The Moving Average Convergence Divergence (MACD) oscillator turned above the zero line in January for an outright go long signal but it has corrected back down to the line and its next signal could be a sell if we closed below the line or a fresh buy signal if we turn higher.

In this weekly chart of CALD, above, we can see a possible ascending triangle formation that has been playing out since early 2016. Prices are above the rising 40-week moving average line. The weekly OBV line has been rising and falling with the pattern and is currently in a uptrend from a late November low. The weekly MACD oscillator is above the zero line but the two moving average lines that make up the indicator are narrowing toward a possible bearish crossover.

In this Point and Figure chart, above, we can see the pattern of higher lows going back to 2014. A trade at $22 on this chart will be a breakout and allow us to project a target of $31.50.

Bottom line: Traders could go long on strength above $21.65 or on a close above $22. Risk below $19.50 looking for $31.50 on the upside.

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