Why We're Adjusting Our Strategy on CrowdStrike
What should traders do now?
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In my last review of cybersecurity firm CrowdStrike CRWD on June 10 I recommended that "The charts and indicators of CRWD look like they can support higher prices in the weeks ahead, with or without inclusion in the S&P 500. Traders could go long on a dip towards $360 if available. Risk to $320."
What should traders do now?
In the daily bar chart of CRWD, below, I can see that the shares gapped higher in early June and then consolidated those gains by trading in the $380 area for a while. Prices are trading above the rising 50-day moving average line and above the rising 200-day moving average line.
Trading volume spiked recently and the On-Balance-Volume (OBV) line turned lower — this move suggests that someone made a big adjustment in their position — probably selling. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in the process of crossing to the downside for a take profits sell signal.
In the weekly Japanese candlestick chart of CRWD, below, I see upper shadows on the three most recent candles. These upper shadows suggest that traders are rejecting the highs. The 40-week moving average line is in an uptrend.
The weekly OBV line shows a down move in June. The MACD oscillator is probably going to make a lower high than the one made in February. This will create a bearish divergence and could foreshadow weaker prices ahead.
In this daily Point and Figure chart of CRWD, below, I can see that prices reached and exceeded a price target in the $363 area.
In this weekly Point and Figure chart of CRWD, below, I can see a price target in the $503 area.
Bottom-line strategy: CRWD could climb higher but a number of things on the charts (above) have made me nervous. Traders should raise stops to $360 or your entry level.
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