A significant move in shares of Workday (WDAY) is expected soon, as a symmetrical triangle pattern has formed in its chart.
WDAY is a software company that offers human capital management, financial management, and business planning solutions. The company’s cloud-based platform combines finance and HR in a single system making it easier for companies to provide insights and decision support.
The company is benefiting from strong adoption of its subscription-based software solutions, which were reflected in its third quarter results. Earnings were up 62.3% year over year. Management also raised its fiscal 2021 guidance for subscription revenues on the back of a strong pipeline.
WDAY has a history of strong revenue growth, which is expected to continue next year. The company also has a strong balance sheet with a net cash balance of $1.2 billion as of October 31st, up from $964 million in the previous quarter.
The stock is trading a high valuation, with a Price to Sales ratio of 12.7 and a Price to Book ratio of 17.6, both higher than the industry averages. WDAY has shown strong near, mid, and long-term momentum, which has resulted in a “Buy” Rating in our POWR Ratings system. The stock also holds a grade of “A” in Trade Grade.
Take a look at the 1-year chart of WDAY below with my added notations:
Chart of WDAY provided by TradingView
As you can see in the chart above, a symmetrical triangle pattern (blue) has formed in the chart of WDAY. As the support and resistance lines converge on each other, the pattern is created. Since there is no true way to know which way the stock will break, most traders will wait for the breakout or breakdown before entering a trade.
A trader could enter a long position on a break above the down trending resistance with a protective stop set under the entry level. However, if the stock were to break below the trend line support, a short trade could be entered with a protective stop above the trend line.
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Christian Tharp, CMT
WDAY shares were trading at $221.36 per share on Wednesday morning, down $4.34 (-1.92%). Year-to-date, WDAY has gained 34.61%, versus a 14.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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