Key Takeaways
- Workday shares soared 11% in extended trading Thursday after the human resources and capital management software provider reported quarterly results that topped estimates and pointed to growth opportunities in international markets.
- The shares have carved out a double bottom between June and August, a well-known chart pattern that indicates an upside reversal after an extended downtrend.
- Investors should monitor important overhead price levels in Workday shares at $264, $279, and $306.
Workday (WDAY) shares soared 11% in extended trading Thursday after the human resources and capital management software provider reported quarterly results that topped estimates and pointed to growth opportunities in international markets.
The company’s stock, which is down around 25% from its record close through Thursday’s trading session, has come under investor scrutiny this year over concerns that enterprise customers have trimmed spending on premium software subscription services amid macroeconomic uncertainty.
Below, we’ll take a closer look at Workday’s chart and use technical analysis to identify key price levels to watch out for after the company’s upbeat report.
Double Bottom Breakout
Workday shares have carved out a double bottom between June and August, a well-known chart pattern that indicates an upside reversal after an extended downtrend.
Moreover, as the formation’s second bottom made a lower low, the relative strength index (RSI) indicator formed a comparatively shallower low to create a bullish divergence, a technical signal suggesting easing selling momentum.
More recently, the stock’s price has reclaimed the 50-day moving average and sits positioned to breakout above the double bottom’s neckline on Friday.
The stock gained 11% to $256.65 in after-hours trading Thursday.
Monitor These Price Levels Amid Post-Earnings Strength
Following Workday’s expected post-earnings pop, investors should focus on three key price levels.
The first sits near $264, an area on the chart that could encounter overhead resistance from a trendline connecting three troughs that formed between December and March with a late May countertrend peak.
Further upside may see the shares climb to the $279 region, where they could run into selling pressure near a horizontal line linking a range of comparable trading levels from December to March, one of which includes the opening price of a prominent stock gap in early March.
Finally, a more significant move higher could drive a rally up to $306, a location likely to attract attention around the stock’s late February record close.
It’s also worth pointing out that this area roughly aligns with a bars pattern price target when taking the up-trending move from September to February and positioning it from the double bottom’s low. Interestingly, that prior move started following a gap lower, similar to the stock’s recent advance, which commenced after the Aug. 5 broad market sell-off.
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As of the date this article was written, the author does not own any of the above securities.