Cloudflare shares traded sharply higher on Friday after its fourth quarter earnings topped analyst expectations.
The stock carved out an 11-month cup and handle before breaking out above the pattern’s top trendline late last month, signaling a continuation of the stock’s longer-term uptrend.
The measuring principle forecasts a points-based upside price target of $170 and a percentage-based target of $217.04.
During profit taking periods, investors should watch key support levels on Cloudflare’s chart around $140 and $116.
Cloudflare (NET) shares traded sharply higher on Friday after its fourth-quarter earnings topped analyst expectations.
The company, which provides services to secure websites and artificial intelligence (AI) applications, said that it added a record number of large customers in the quarter and anticipates demand this year will accelerate growth.
Cloudflare shares have jumped more than 30% since the start of the year as of Thursday’s close. This boost comes amid expectations that cybersecurity firms stand to benefit from growing cyber threats.
Below, we break down the technicals on Cloudflare’s chart and point out key post-earnings price levels to watch out for.
Cloudflare shares carved out an 11-month cup and handle before breaking out above the pattern’s top trendline late last month, signaling a continuation of the stock’s longer-term uptrend.
After a brief consolidation period, gains look set to accelerate in Friday’s trading session following the company’s better-than-expected results.
It’s also worth noting that the 50-day moving average (MA) crossed above the 200-day MA last November to form a golden cross, a bullish chart pattern that confirms the stock’s recent move higher.
Let’s project two potential upside price targets by applying technical analysis and also identify several key support levels worth watching during potential profit taking periods.
Investors can forecast upside price targets in the stock by using the measuring principle, a technique that analyzes chart patterns to project future price movements.
When applying the technique to forecast a points-based target, we calculate the distance of the cup and handle’s cup in points and add that amount to the pattern’s top trendline. For instance, we add $54 to $116, which projects a target at $170, 20% above Thursday’s close.
To project a percentage-based target using the measuring principle, we calculate the percentage change of the cup and handle’s “cup” and add it to the pattern’s top trendline value. For example, we apply an 87.1% increase to $116, which forecasts an upside target of $217.04, about 53% above yesterday’s closing price.
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