Workday, Inc. (WDAY) soared higher from mid-to-late November and recently broke out to new highs for the move up. Prices held key support around $120 but the rally, which included a bullish gap, happened when the broad market was having difficulties. This makes the strength in WDAY all the more impressive.
Let's check out some charts and indicators to see how far this breakout can carry.
In this daily bar chart of WDAY, below, we can see that prices are above the rising 50-day moving average line and the bullish 200-day line. For most of October WDAY was below the rising 200-day average line but the June low and support held. A sustained decline did not materialize.
Prices bounced about $25 into early November and then quickly retested the late October low. The November retest was very quick and very powerful.
For the past 12 months the daily On-Balance-Volume (OBV) line shows a positive trend and tells me that buyers of WDAY have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has soared above the zero line giving us a go long signal from late November. The two moving averages of this indicator have narrowed and that may or may not lead to a crossover and take profits signal.
In this weekly bar chart of WDAY, below, we can see that prices have tripled over the past three years. There have been other tests of the rising 40-week moving average line and each one, with the benefit of hindsight, has been a buying opportunity.
The weekly OBV line shows a peak in March of 2018 which makes it a bearish divergence when compared to the rising price action. The OBV line has improved from the middle of October but it is still in a longer-term decline.
The weekly MACD oscillator just crossed to the upside for a fresh outright buy signal.
In this Point and Figure chart of WDAY, below, we can see a big upside breakout and a $184.77 price target for starters.
Strength to $173.49 will be bullish and a decline to $157.05 bearish.
Bottom line strategy: It looks like WDAY is making a short-term bullish continuation pattern like a pennant. An upside breakout is anticipated with $185 and probably $200 as price targets. Traders could long WDAY at current levels and on strength above $173.50.