Key Takeaways
- Palo Alto Networks shares gained ground in premarket trading Tuesday after the cybersecurity provider released earnings that surpassed expectations and issued an outlook at the high end of Wall Street forecasts.
- Buyers snapped up a temporary dip below a multi-month trendline and the 200-day moving average earlier this month, with the price continuing to show upward momentum leading into the company’s quarterly results.
- Investors should watch key overhead chart levels in Palo Alto shares at $345, $375, and $435, while also keeping an eye on support around $316.
Shares in Palo Alto Networks (PANW) rose in premarket trading Tuesday after the cybersecurity provider released quarterly results that surpassed expectations and issued an outlook at the high end of Wall Street forecasts, as customers embraced its offerings amid growing cyber threats.
Although the shares have gained about 16% higher since the start of the year, investors have scrutinized the company’s platformization plan. Under the strategy, the company consolidates its cybersecurity services on its platform and bundles offers, in an effort to become a one-stop shop for clients.
Palo Alto shares were up 2.4% at $351.50 about two hours before the opening bell Tuesday.
Below, we discuss the technicals on Palo Alto’s chart and point out important price levels to watch out for following the better-than-expected results.
Buyers Defend Long-Term Uptrend
Since bottoming out in January last year, Palo Alto shares have remained in a long-term uptrend. More recently, buyers promptly snapped up a temporary dip below a multi-month trendline and the 200-day moving average earlier this month, with the price continuing to show upward momentum leading into the company’s quarterly report.
Price Levels to Monitor Amid Post-Earnings Buying
If Palo Alto shares rally, investors should monitor three overhead price levels of interest.
The first sits around $345. Although projected to open above this level on Tuesday, it’s worth monitoring if the stock can hold this area, a location that may encounter selling pressure near periods of consolidation on the chart during January and February.
Further bullish momentum could see the shares revisit the $375 region, where they would likely run into significant resistance around the stock’s all-time high (ATH) set in February.
To forecast an upside target above the stock’s record high, we can use a bars pattern, a chart technique that comes in handy when there’s no prior price action to compare. We do this by taking the trending move from November to February and repositioning it from this month’s low, which projects a target of around $435.
Important Support Level to Watch
If the shares undergo a pullback, investors should keep a close eye on the $316 level just above the multi-month uptrend line and rising 200-day MA. This area on the chart would likely attract buying interest near a key horizontal line joining the December swing high with several other peaks and troughs around the same level between February and August.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.