Software provider Tyler Technologies (TYL) was up smartly in trading Monday although trading volume is light. Is this a "quiet bottom" or are prices vulnerable to further declines? Let's drill down on the charts and indicators to see what strategy makes sense.
In this daily bar chart of TYL, below, I see a longer-term downtrend in place. Prices are testing the declining 50-day moving average line but remain below the bearish 200-day moving average line. The trading volume increased in November when prices made a slight new low but turnover did not reach a level where I would suggest we have seen strong hands enter the market.
The On-Balance-Volume (OBV) line has been in a downward trend all year and tells me that sellers of TYL have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of TYL, below, I see a mixed chart. Prices are still in a downward trend as they trade below the declining 40-week moving average line. There is a bottom reversal pattern at the end of October but it only turned the trend from down to sideways. A large upper shadow on a candle in early December tells me that traders are now rejecting the upside.
The weekly OBV line shows weakness from early 2022. The weekly MACD oscillator is bearish.
In this daily Point and Figure chart of TYL, below, I see that the software is projecting a possible downside price target in the $272 area.
In this weekly Point and Figure chart of TYL, below, I see a lower price target in the $264 area.
Bottom line strategy: It doesn't look like TYL has made a durable bottom formation and with the Point and Figure charts suggesting further declines I would avoid the long side for now.
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