Unity Software (U) was reviewed back on June 16 and we concluded that "There are three types of analysis -- fundamental, technical and quantitative. None of these approaches are perfect... I have recommended buying stocks that gapped sharply lower the next day. Not fun. Meanwhile, let's avoid the long side of U."
Let's check the charts again.
In this daily bar chart of U, below, we can see that prices have been in a downward trend the past 12 months. Prices are trading below the declining 50-day moving average line and the bearish 200-day moving average line.
The On-Balance-Volume (OBV) line has matched the decline and tells us that sellers of U are continuing to be aggressive sellers of the stock. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bearish as it remains below the zero line.
In this weekly Japanese candlestick chart of U, below, we see a bearish setup. Prices are in a longer-term downward trend below the negatively sloped 40-week moving average line. The candles are red (bearish) and have yet to show a reversal pattern or even lower shadows. The weekly OBV line and the MACD oscillator are bearish too.
In this daily Point and Figure chart of U, below, we can see a potential downside price target in the $12 area.
In this second Point and Figure chart of U, below, we used weekly price data. Here the price target is just $5. Ouch.
Bottom line strategy: The price of U could always make a bounce but the charts and indicators are bearish and pointed lower. Avoid the long side of U.
