Shares of business software company Asana ( ASNA) gapped lower Thursday on the heels of disappointing quarterly numbers and an analyst downgrade.
We warned Real Money subscribers that the charts were bearish back on November 29, writing that "Traders should be flat (no position). Avoid the long side as further declines are possible."
Let's check on the charts again.
In this updated daily bar chart of ASAN, below, we can see that prices have made a new low for the move down. ASAN is trading below the negatively sloped 50-day moving average line. The 200-day line is cresting. The trading volume has been heavy since early December as investors appear to be voting with their feet.
The On-Balance-Volume (OBV) line has worked lower since late October telling us that sellers of ASAN are more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of ASAN, below, we see a mixed to bearish picture. Prices are in a downtrend as they trade below the cresting 40-week moving average line. The lower shadows on recent candles are of no help as prices have sunk to a new low.
The weekly OBV line is steady for now. The MACD oscillator is bearish but it is/was narrowing.
In this daily Point and Figure chart of ASAN, below, we can see the new lows that have been made but with the gap filled in. A downside price target of $12 is shown. I would look for buying interest (support) to develop in the $30 area.
Bottom line strategy: Continue to avoid the long side of ASAN. Two things to watch for. Today's gap could become an exhaustion gap if the gap is soon filled. Another thing to watch for is a day when the news on ASAN is bearish and the stock does not decline.
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