A sell-side firm started their fundamental coverage of cybersecurity firm Fortinet FTNT Friday with an Overweight or Buy recommendation. A fundamental backer is good but I want to concentrate on the chart picture and the indicators.
Let's check.
In this daily bar chart of FTNT, below, we can see that prices made a low in January and then a lower low in May only to break the May low in late August/early September. Prices are trading below the negatively sloped 50-day and 200-day moving average lines.
The On-Balance-Volume (OBV) line shows a rise from May to early August followed by a fresh decline telling us that sellers of FTNT are being more aggressive than buyers in recent weeks. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of FTNT, below, we can see a rally from 2019 followed by a top formation in 2021-22 and a decline in 2022. FTNT is trading below the declining 40-week moving average line.
The weekly OBV line has drifted lower from May. The MACD oscillator is in a bearish alignment below the zero line.
In this daily Point and Figure chart of FTNT, below, we can see a potential downside price target in the $33 area.
In this second Point and Figure chart of FTNT, below, we used weekly price data. Here the charting software suggests a price target of $33 too.
Bottom line strategy: FTNT could bounce but the downward trend is likely to dominate in the weeks ahead. Avoid the long side of FTNT.
