After a Huge Run for CrowdStrike, Is It Time to Pay the Piper?
The cybersecurity name received a downgrade Tuesday, but we were on top of this first.
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CrowdStrike Holdings CRWD was downgraded Tuesday by Piper Sandler PIPR after a huge run taking the cybersecurity firm to a hold-equivalent rating from overweight.
Let's check out the charts and indicators.
In the daily bar chart of CRWD, below, I can see a good example of prices not showing clear signals but the indicators (derivatives of the price and volume action) showing signs of weakness. Prices have rallied strongly from the lows in August to highs in June. CRWD trades above the rising 50-day moving average line and above the rising 200-day moving average line.
The trading volume was steady until June when it showed us some strong increases. The math-driven On-Balance-Volume (OBV) line made a new high in June and then quickly turned lower. The Moving Average Convergence Divergence (MACD) oscillator is correcting to the downside.
In the weekly Japanese candlestick chart of CRWD, below, I can see that the shares have surged up some four-fold in less than two years. CRWD trades above the rising 40-week moving average line. The price action in the past four weeks could turn into an island reversal if prices gap lower from here. If not an island reversal some other top reversal pattern could be underway.
The weekly OBV line has made a strong move up from early 2023 but we may be now witnessing a reversal of this trend. The MACD oscillator crossed to the downside in March and is trying to decide on its next move.
In this daily Point and Figure chart of CRWD, below, I can see that the shares reached and exceeded a price target in the $347 area. A trade at $368 could weaken this chart.
In this weekly Point and Figure chart of CRWD, below, I can see a price target of $503 but a trade at $372 could start to weaken this chart.
Bottom-line strategy: Traders who may be long CRWD should consider raising stop protection or trimming their long position. We adjusted our recommendation on CRWD on June 27. Did the analyst at Piper Sandler read my commentary?
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