Docusign Inc. (NASDAQ: DOCU) shows signs of an upcoming price surge. There are a number of bullish indications on its stock daily and weekly stock charts…
Bullish Indications
#1 Ascending Triangle Pattern: The daily chart shows that the stock has currently formed an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
DOCU – Daily Chart
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating the overall bullishness of the stock.
#3 MACD above Signal Line: In the daily chart, the MACD line is above the MACD signal line which is a bullish signal.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates possible bullishness.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, indicating bullishness.
#6 Flag Pattern: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in pink color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). The stock is also trading above its 50-week SMA, indicating that the bulls are now in control.
DOCU – Weekly Chart
#7 Bullish ADX and DI: The weekly chart shows that the ADX line and the (+DI) line are currently above the (-DI) line, indicating bullishness.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart as well. This indicates possible bullishness
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for DOCU is above the price of $313.00. This is marked as a green color dotted line.
TP: Our target prices are $320 and $330 in the next 3-6 months.
SL: To limit risk, place a stop loss at $309.00. Note that this stop loss is on a closing basis.
Our target potential upside is almost 2% to 12% in the next 3-6 months.
For a risk of $4.00, our target rewards are $7.00 and $17.00. This is almost 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 Ascending 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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