Software company Autodesk (ADSK) sank sharply Wednesday morning after revealing weaker-than-expected guidance, thanks to foreign exchange and macroeconomic challenges. Let's check out the charts to see if this weakness will precipitate further declines.
In this daily bar chart of ADSK, below, we can see a price gap to the downside for ADSK. Prices are back below the 50-day and the 200-day moving average lines. The daily On-Balance-Volume (OBV) line shows weakness from late October.
The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for another take-profit sell signal. Prices are coming back a bit from the sharply lower opening, so things could change by the close of trading Wednesday.
In this weekly Japanese candlestick chart of ADSK, below, we can see a mixed picture. Prices are currently back below the 40-week moving average line. There are twins or double peaks above the $225 level so a close below the trough at $180 will likely signal further declines. The weekly OBV line has been chopping sideways the past year. The MACD oscillator improved to the underside of the zero line but may be turning lower again from here.
In this daily Point and Figure chart of ADSK, below, we can see the decline for Wednesday with the price gap filled in. A downside price target in the $147 area is projected.
In this weekly Point and Figure chart of ADSK, below, we can see an upside price target in the $281 area but a trade at $180 should turn the chart bearish.
Bottom line strategy: Downside price gaps can be viewed in at least two ways. The bulls may see this as a buying opportunity, while the bears see this as a sign of weakness and likely further declines. Let's give ADSK a few more days of trading to see which way it will trend.
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