The international software company whose core team is largely drawn from the founders of Ludicorp, the company that created Flickr, Slack Technologies Inc. (NYSE: WORK) seems to be ready for a price surge according to its latest charts.
Bullish Indications
#1 Descending Triangle Pattern Breakout: The stock’s daily chart shows that it has recently broken out of a descending triangle pattern in an upward direction. This descending triangle pattern is marked in purple color on the daily chart. An upward breakout from a bearish pattern like a descending Triangle is typically a good bullish sign.
Daily Chart – WORK
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish bias.
#3 Price above MA: The stock is currently trading above its 50-day SMA.
This shows that the bulls are currently in control.
#4 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines.
The +DI line and ADX lines are also currently above the –DI line.
This indicates possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock had broken out of a downtrend and has started moving higher. The downtrend line is marked in orange color in the chart. This seems like a possible bullish sign.
Weekly Chart – WORK
#7 Double Bottom Pattern Breakout: From the weekly chart, we can see that the stock had recently consolidated and formed a double bottom pattern. This pattern is marked in pink color in the chart. A double bottom pattern is a strong bullish pattern and a breakout from it usually foretells the possibility of an upmove in the short term.
#8 %K above %D: The stochastics reveal that the %K line is currently above the %D line in the weekly chart. This is a possible bullish sign.
#9 Bullish MACD: The MACD line (blue color) is currently above the MACD signal line (orange color) in the weekly chart as well. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for WORK is above yesterday’s close. This translates to a price above $26.60.
TP: Our target prices are $32 and $40 in the next 3-6 months.
SL: To limit risk, place a stop loss at $23.40. Note that the stop loss is on a closing basis.
Our target potential upside is almost 20% to 50% in the next 3-6 months.
For a risk of $3.20, our target rewards are $5.40 and $13.40. This is a 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the breakout level of the descending triangle pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy trading!
Tara
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