Stock Has Gained 35% From Its August Low

Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • CrowdStrike shares are in the spotlight this week as the cybersecurity company prepares to release quarterly results Wednesday, its first earnings report after an erroneous software update it carried out caused a global IT outage
  • A bullish piercing pattern on the weekly chart has helped shift momentum leading into the company’s quarterly financial results.
  • Investors should watch key lower price levels at $235 and $201, while monitoring important overhead price levels at $285 and $330.
  • A bars pattern, which takes the stock’s strong pandemic trending move from March 2020 to February 2021 and positions it from this month’s low, forecasts a longer-term price target around $1,205.

CrowdStrike shares (CRWD) are in the spotlight this week, with the cybersecurity giant set to disclose its fiscal 2025 second-quarter results after the closing bell on Wednesday. Investors will have particular interest in the report, given it’s the first opportunity to assess the financial impact of an erroneous software update carried out by the company that caused a global IT outage last month.

Despite the stock selling off sharply after the incident, it has recovered 35% from its recent August low amid growing consensus among analysts that the impact of the outage may be limited and already priced into the shares.

Below, we look over the technicals on CrowdStrike’s weekly chart and point out crucial price levels to watch as the cybersecurity giant prepares to release its quarterly report.

Bullish Piercing Pattern Shifts Momentum

Since undergoing a strong intraday reversal from the 200-week moving average (MA) to complete a piercing pattern earlier this month, CrowdStrike shares have continued to gain ground. Importantly, the bullish two-bar candlestick formation has helped shift momentum leading into the company’s earnings report.

Looking ahead, investors should monitor several important price levels likely to attract interest amid CrowdStrike’s looming earnings report.

Lower Price Levels in Focus

A pullback from current levels could see the shares initially fall to the $235 area, a location where the price may find support from the prominent April countertrend high that formed towards the start of the stock’s down-trending move from October 2021 to January last year.

Ongoing selling may lead to a retest of this month’s low around $201, a region that has previously found a confluence of support from August 2022 peak and the upward sloping 200-week MA.

Overhead Price Levels in Play

Further upside could see the shares climb to $285, an area on the chart just above the 50-week MA where investors may look to place sell orders near a trendline linking two peaks in August and October 2021 with the April 2024 swing low.

A convincing move above this level could fuel a move up to $330, where the shares may encounter overhead resistance near a period of narrow consolidation that formed on the chart between early February and late March this year.

Longer-Term Price Target

We can project a longer-term price target by using a bars pattern. We do this by taking the stock’s strong pandemic trending move from March 2020 to February 2021 and position it from this month’s low, which forecasts a target of around $1,205. We selected this trending move as it followed a steep five week correction of around 50%,similar in size to CrowdStrike’s recent five-week drop.

CrowdStrike shares were up 0.3% at $272.43 about two hours before Monday’s opening bell.

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