Palo Alto Networks (PANW) is set to report its fiscal second-quarter results after the close of trading here on Monday. Let's check the charts and indicators to see how things may be positioned for the provider of cybersecurity platforms.
The last time we reviewed PANW was way back on Aug. 22 of last year. We wrote at that time, "The three charts above are strong and the indicators are bullish... the $323-$340 area is our next price objective."
In this daily bar chart of PANW, below, we can see the PANW has even left our $340 target in the dust. Prices have rallied strongly since early November. PANW is trading above the rising 50-day moving average line, which was successfully tested at the end of January. The slope of the 200-day line is also positive. Trading volume has not expanded during the latest advance and the On-Balance-Volume (OBV) line shows a peak in December, telling us that sellers have been more aggressive into the recent highs. The Moving Average Convergence Divergence (MACD) oscillator also peaked in late December and is making a lower high this month, giving us a bearish divergence when compared to the price action.
In this weekly Japanese candlestick chart of PANW, below, we can see that the two most recent weeks show us two-thirds of a top reversal pattern. A bearish candle would complete the reversal this week. The weekly OBV line peaked in December and the MACD oscillator has narrowed -- both are signs that the uptrend is wavering. PANW is also trading at a double of the base pattern from around $200.
In this daily Point and Figure chart of PANW, below, we can see a potential upside price target in the $492 area. A trade at $369.56 would start to weaken the picture.
Bottom line strategy: If you have a nice profit on your long position in PANW you might consider taking some profits ahead of earnings.
