Here's What to Watch as MongoDB Breaks Down From a Top Formation

Document database MongoDB MDB cratered Thursday night following the release of their Q1 financial results and outlook. The stock was down sharply so let's look at the charts for some guidance.

In this daily bar chart of MDB, below, I can imagine that prices are trading in the $235 area. Prices kept finding buying interest (support) in the $320 area (a neckline) until they did not (Thursday's weak close). 

Trading shows that every bounce or rally over the past twelve months failed. The trading volume has been active. 

The On-Balance-Volume (OBV) line shows us a clear decline from February (think of this as the "right shoulder") telling us that sellers of MDB have been more aggressive than buyers for several months before Thursday and Friday's sharp decline. 

The Moving Average Convergence Divergence (MACD) oscillator has spent much of the last year below the zero line.

In this weekly Japanese candlestick chart of MDB, below, you can see the top pattern playing out over the last year. Some might call it a complex head and shoulders top pattern that has unfolded over several months of distribution (selling). 

MDB trades below the declining 40-week moving average line. The weekly OBV line is pointed down and the MACD oscillator is bearish. When the candle for this week is plotted it will be a long red (bearish) bar.

In this daily Point and Figure chart of MDB, below, I can see that prices have reached and exceeded a downside price target in the $341 area. Let's check the weekly chart.

In this weekly Point and Figure chart of MDB, below, I can see a downside price target in the $245 area. Maybe buyers will show up here. We'll see.

Bottom line strategy: I called for further declines in MDB back in my review of March 8th. Continue to avoid the long side of MDB. The large top pattern discussed above suggests we could see a decline to the $180 area.

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