In my December 14 review of Workday (WDAY) I wrote that "WDAY has rallied $50 in a short span of time so a period of sideways price movement is more likely now than continued gains. Traders could use this anticipated sideways action to do some buying of WDAY around $170 risking to $155. The $220 area is our price target for now."
Let's check out the charts of this cloud-based software vendor of HR management and financial management applications.
In this daily bar chart of WDAY, below, I can see that prices have pulled back or corrected lower since the middle of December. WDAY is still trading above the rising 50-day moving average line but it is back below the declining 200-day line.
The On-Balance-Volume (OBV) line has turned lower suggesting a shift back towards more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal - a sell for a stock still in an uptrend.
In this weekly Japanese candlestick chart of WDAY, below, I cannot ignore a large upper shadow on the candle pattern in early December. This is a rejection of the highs by traders and can mark the end of an upside move. Prices are correcting lower and are back below the declining 40-week moving average line.
The weekly OBV line is weakening again in December. The MACD oscillator is below the zero line and narrowing - a sign of weakness.
In this daily Point and Figure chart of WDAY, below, I can see a potential upside price target in the $226 area. A trade at $186 is needed to refresh the uptrend.
In this weekly Point and Figure chart of WDAY, below, I can see a potential price target in the $269 area.
Bottom line strategy: In a different broad market environment shares of WDAY could be rallying but with a weak environment for the averages shares of WDAY are likely to trade sideways into the first quarter of 2023. Sideways price action may be disappointing but a bigger and wider base pattern is preferred over a smaller base. Patience.
