The cloud-based learning and talent management solutions provider headquartered in Santa Monica, California, Cornerstone OnDemand, Inc. (NASDAQ: CSOD) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: The daily chart of CSOD shows that the stock has been trading within a falling wedge pattern for the past few months. This is marked in the daily chart in purple color. A falling wedge pattern is a bullish pattern. Once a breakout from this pattern occurs, it indicates that the stock has gained momentum and has the potential to move further up. Currently, the stock is moving up after taking support near the bottom of the falling wedge pattern.
Daily Chart – CSOD
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day moving averages, indicating a bullish bias for the stock.
#4 Bullish Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#5 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
CSOD has currently taken support at 61.8% Fibonacci support level as seen in the weekly chart before moving up again.
So, this seems like a good support area for the stock to bounce upwards.
Weekly Chart – CSOD
#6 Bullish RSI: The RSI is currently moving up after reaching oversold levels. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of CSOD in two scenarios:
- If the stock breaks out of the falling wedge pattern at around $52.50.
- If the stock corrects to the bottom of the falling wedge pattern at around $45.60.
TP: Our target prices are $60 and $70 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $48.90 (for entry near $52.50) and $43.40 (for entry near $45.60). Note that this stop loss is on a closing basis.
Our target potential upside is almost 14% to 54% in the next 3-6 months.
- Entry at $45.60: For a risk of $2.20, our first target reward is $14.40 and second target reward is $24.40. This is a 1:7 and 1:11 risk-reward trade.
- Entry at $52.50: For a risk of $3.60, our first target reward is $7.50 and second target reward is $17.50. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 11x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the bottom of the falling wedge pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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