Workday (WDAY) made a V-like bottom earlier this year as it sold off rapidly in December and January, but prices have recouped their losses and then some -- although the gains have been harder to achieve and momentum has slowed. Prices could be poised for a move to the downside and traders should be on alert for a reversal.
WDAY experienced some choppy trading in April through July but prices have been more "directional" since then (see the chart below). WDAY is above the rising 50-day and 200-day averages.
The On-Balance-Volume (OBV) line is pointed up but it has not (yet?) made a new high along with the price action the past four weeks or so. In the lower panel we have the 12-day momentum study and here we see lower peaks since July. A weakening momentum picture while prices move higher is a bearish divergence and can foreshadow a turn lower.
In this three-year weekly chart of WDAY, below, we can see prices above the rising 40-week moving average line. The weekly OBV line is rising but the slow stochastic indicator (a popular overbought/oversold indicator) is above the 85% which some traders consider overbought.
Prices can still more higher and get more overbought or extended but it does say that a profit-taking reaction could develop at any time.
Tread carefully.
