DocuSign ( DOCU) is expected to report their latest quarterly figures on Thursday. In our Dec. 3 review we noted that, "We said this just the other day but we will repeat it: Further declines are possible. Avoid the long side for now." Let's check the charts again.
In this daily bar chart of DOCU, below, we can see that prices have tumbled lower since August. Prices are trading below the declining 50-day moving average line and extended (oversold) below the declining 200-day moving average line. Trading volume has been heavier since the downside price gap. The On-Balance-Volume (OBV) line has been weakening since August. The 12-day momentum study has made higher lows since December even though prices have made lower lows. This is a bullish divergence and tells us that the pace of the decline has slowed down.
In this weekly Japanese candlestick chart of DOCU, below, we see a mixed picture. Prices are in a downtrend and trade well below the declining 40-week moving average line. Prices could be considered extended vs. the 40-week line. The candles are showing us small real bodies and that means there is a balance between buyers and sellers now. The weekly OBV line does not show much weakness and the 12-week price momentum study shows improvement.
In this daily Point and Figure chart of DOCU, below, we can see a possible downside price target in the $69 area.
In this weekly close only Point and Figure chart of DOCU, below, we can see that prices reached and exceeded a downside price target in the $209 area.
Bottom line strategy: I am not sure that DOCU can rally much, but I do feel that for now DOCU is exhausted on the downside. I have no special knowledge of what DOCU is going to report for earnings but a near-term rebound would not surprise me.
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