In our last review of the charts of DocuSign ( DOCU) back on March 11, we wrote that "Today could become a meaningful low on the chart but it is way too early to declare the downtrend is over. Stand aside and let's see if any lower shadows are seen in the days ahead."
DOCU is scheduled to report earnings after today's market close.
Let's review the charts again.
In this updated daily bar chart of DOCU, below, we can see that prices made a low in March and had a rebound before making a slightly lower low in May. The On-Balance-Volume (OBV) line made a low in March with the price action but a higher low in May even though prices were weaker. This is a bullish divergence.
The Moving Average Convergence Divergence (MACD) made a low in March and a higher low in May for another bullish divergence. Now the MACD oscillator is close to crossing above the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of DOCU, below, we can see that prices made a bottom reversal pattern in early May. DOCU is below the declining 40-week moving average line and because it trades at half of the intersection of the line I would consider DOCU extended or oversold.
The weekly OBV line shows an unusual bullish divergence with prices declining sharply but the OBV line remaining very stable. The weekly MACD oscillator is improving after a cover shorts buy signal.
In this daily Point and Figure chart of DOCU, below, we can see a potential upside price target in the $111 area.
In this weekly Point and Figure chart of DOCU, below, we see a very bearish price target. A trade at $123.69 is needed to improve the picture.
Bottom line strategy: I have no special knowledge of what DOCU is going to report to shareholders and analysts tonight, but aggressive traders could go long DOCU at current levels risking to $73. Look for a rally to the $111 area.
