Check Point Software: What the Charts Indicate About New Highs

Here's our price target and trading strategy.

During the Lightning Round segment of Jim Cramer's Mad Money program Monday night, one caller asked about Check Point Software Technologies Ltd. (CHKP) . "I think this is a good one," replied Cramer.

What do the charts say?

When we last reviewed the charts of CHKP back on June 23 we said, "CHKP needs one or two strong up days with increased volume to "get it moving" higher. Traders could go long on strength above $111 and above $114. Risk a close below $105 for now." Prices reached our first price target of $132 by early September. 

Let's check out the charts again.

In the daily bar chart of CHKP, below, we can see that the shares are pulling back after a recent breakout to new highs. Prices are above the rising 50-day moving average line and the rising 200-day moving average line.

The On-Balance-Volume (OBV) line shows weakness from August into December before the December rally. I don't know if this improvement in the OBV line is sustainable or just a temporary event. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but it has narrowed in recent days. 

 

In the weekly bar chart of CHKP, below, we can see how prices broke out over the highs of 2020 and early 2019. The recent pullback in prices looks like a retest of the highs or former resistance. The $130 area should act as support now. We'll see. The 40-week moving average line has a positive slope and the weekly OBV line shows strength since April but it has not made its own new high so this is a bearish divergence.

 

The MACD oscillator crossed to the upside last month for a fresh buy signal. 

 

 

 

In this daily Point and Figure chart of CHKP, below, we can see that the shares reached a $134 price target.

 

 

 

In this weekly Point and Figure chart of CHKP, below, we can see a potential price target of $179.  

 

 

 

 

Bottom-line strategy: Traders who are still long CHKP should raise stop protection to $119 from below $105. Wait for a new high close before adding to longs. The $179 area is our price target for the second half 2021.

 

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