Workday (WDAY) broke out on the upside from a large consolidation pattern. Prices rallied from the breakout but now look like they can retrace temporarily back toward the breakout point.
A pullback to a breakout point or area is not unusual and could shake out traders who bought late or have a bad trade location. A fresh look at the charts and indicators should give you a possible road map.
In this daily bar chart of WDAY, above, we can see highs in October and February. Prices finally are strong enough to overcome both of these highs earlier this month -- notice the rapid rise around mid-May. Everything seems to be in gear on the upside except the volume. Looking at the volume histogram right below the price chart, you can see that volume was not heavy on the breakout. Light or normal volume on a breakout can mean the breakout level can be retested. Heavy volume on a breakout can mean the strength continues. The rest of the indicators are bullish -- rising 50-day and 200-day moving average lines. The daily On-Balance-Volume (OBV) line has made a new high for the move up and the momentum is not diverging from the price action.
In this weekly chart you can see the large consolidation pattern going back to 2014. Prices are above the rising 40-week moving average line, but here too volume does not explode on the breakout. The weekly OBV line is not making a new high for the move up on this timeframe. The weekly MACD oscillator is bullish.
In this Point and Figure chart, above, we can see the trade at $97.92 is the breakout. Prices have only gone a little further and a quick retracement to the breakout or just below is possible.
Bottom line: After this possible "breakout shakeout," we could see WDAY move substantially higher with $140 a possible longer-term upside objective.
