Twilio May Not Rally to the Clouds, but Possibly to July Highs

The stock price of Twilio Inc. (TWLO) has been trading higher from early November. Recently, Wells Fargo (WFC) started covering the cloud communications platform and rated it Overweight. Earnings are anticipated to be released on Feb. 5, and consensus estimates see $318.80 million in revenue and earnings per share of a penny. Fundamental numbers crunching is above my pay grade, so let's take a look at the charts and indicators.  

In this daily bar chart of TWLO, below, we can see how prices have firmed up the past three months. Prices are above the rising 50-day moving average line and above the bottoming 200-day moving average line. The trading volume around the November low was heavy and helps validate the upside reversal. The daily On-Balance-Volume (OBV) has been moving up from November and tells us that buyers of TWLO have been more aggressive.

The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero-line in early January for an outright-buy signal. The two moving averages that comprise this indicator have narrowed, but they have not crossed, so we could see a new buy-signal soon.  

In this weekly bar chart of TWLO, below, we can see that prices have rallied above the declining 40-week moving average line. The weekly OBV line has made a new high for the move up and leads the price action. The weekly MACD oscillator has turned up from below the zero-line for a cover-shorts buy signal.  

In this Point and Figure chart of TWLO, below we can see an upside price target in the $152 area. 

Bottom line strategy: It looks like TWLO can move higher from here, but one cannot rule out a shallow dip before renewed gains. Longs and buyers should risk a close below $115. The low $150 area is our price target. 

(Twilio is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells it? Learn more now.)

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