Sizing Up ServiceNow Now That It Has Run Higher

It appears there is more upside potential for the cloud computing stock, though traders should exercise caution.

ServiceNow Inc. (NOW) is a software company that provides a cloud-based platform for automating IT management workflows. ServiceNow shares made an upside breakout from a base pattern last month. Let's check out the moving averages and indicators for an area to go long.

In this daily bar chart of NOW, below, I can see how the chart and indicators have strengthened since October. The moving averages have bottomed and turned higher. In early May there was a pullback and retest of the 200-day line that was a buying opportunity in hindsight. The daily On-Balance-Volume (OBV) line shows a rising trend since October, telling us that buyers have been more aggressive than sellers. The trading volume shows an increase from September. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory.

 

In this weekly Japanese candlestick chart of NOW, below, I see a positive-looking chart. Prices trade above the bottoming 40-week moving average line. The weekly OBV line has been going higher for months. The MACD oscillator is bullish. The most recent candle pattern looks like a doji or spinning top and could mark a temporary high in prices.

 

 

In this daily Point and Figure chart of NOW, below, I can see a price target in the $684 area.

 

In this weekly Point and Figure chart of NOW, below, a price target in the $639 area is shown.

 

 

Bottom-line strategy: Traders could probe the long side of NOW in the $520 area, risking to $480 for now. The $639 area is the price target.

 

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