In our April 8 review of cybersecurity firm CrowdStrike (CRWD) , we wrote that "CRWD started out strong Friday but I am most concerned about the close. A weak close will mean another failure at the underside of the 200-day moving average line. A strong close on Friday would suggest further upside." CRWD failed and turned lower into May.
Let's check on the charts and indicators again before earnings are reported this Thursday after the close of trading.
In this daily bar chart of CRWD, below, we see an "interesting" picture. Prices have stabilized in the $140 area this month, down 50% from the October/November highs. Prices are trading below the declining 50-day and the bearish 200-day moving average lines.
The On-Balance-Volume (OBV) line has been strong since December and its new highs are suggesting that we will see new price highs. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of CRWD, below, we see some positive developments. The three most recent candles give us a bottom reversal pattern. Reversals from a downtrend can be sideways or they can be to the upside.
The weekly OBV line is very positive as it has been very strong when compared to the price action which has been very weak until recently. This is a bullish divergence.
The weekly MACD oscillator is in flux but it shows us another bullish divergence as prices made new lows, but the indicator did not make new lows.
In this daily Point and Figure chart of CRWD, below, we can see a potential upside price target in the $235 area.
In this weekly Point and Figure chart of CRWD, below, we used close only price data. Here we see a price target in the $64 area.
Bottom line strategy: I have no special knowledge of what CRWD may report on Thursday but aggressive traders could probe the long side of CRWD on available weakness ahead of earnings on Thursday. Risk to $142. $200 and $235 are our potential price targets in the weeks ahead.
