DocuSign Will Likely Work Its Way Lower After a Bounce

The course of least resistance for DOCU looks to be lower.

In his No-Huddle Offense segment of Mad Money, Jim Cramer told viewers Monday evening as the weather is getting colder and Covid-19 cases in the U.K. and Spain are climbing, it looks like we're right back where we started, with investors buying up the Covid stocks. Real estate remains hot, and that's good news for DocuSign (DOCU) , added Cramer. 

Let's check out the charts of DOCU. 

In the daily bar chart of DOCU, below, we can see some weakness has developed. It looks like DOCU has just broken the August lows and we could see further downside testing of the July lows. Prices are below the declining 50-day moving average line.

Trading volume has been heavy this month and the On-Balance-Volume (OBV) line has turned sharply lower signaling a shift from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright sell signal.

 

 

In the weekly Japanese candlestick of DOCU, below, we can see some bearish clues. There is a large upper shadow last month showing how traders rejected the highs. The 40-week moving average line is rising but this is a lagging indicator.

 

The weekly OBV line shows weakness from late August and may be the start of a turn lower. The MACD oscillator has crossed to the downside for a take profits sell signal. 

 

 

 

In this daily Point and Figure chart of DOCU, below, we can see an upside price target in the $249 area. 

 

In this weekly Point and Figure chart of DOCU, below, it is projecting the $85 area as a potential downside target. 

 

 

 

 

Bottom-line strategy: DOCU could make an upside bounce but with several negative signals or clues the course of least resistance for DOCU could be lower. 

 

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