Buy the Earnings Dip in CrowdStrike? Let’s Look at the Chart

CrowdStrike is dipping after earnings and strong revenue growth. Here's how to trade the stock from here with potential support nearby.
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CrowdStrike  (CRWD) - Get Report isn't giving investors the post-earnings action they were hoping for. So far, shares were down about 2.5% on Friday.

While the slight slump isn’t the end of the world - and with shares still up more than 6% over the past month - it’s disappointing given the report.

Revenue surged 70% year over year and beat analysts’ expectations, while adjusted earnings also beat estimates.

Like DocuSign  (DOCU) - Get Report, CrowdStrike’s second-quarter and full-year outlook also topped consensus expectations. However, unlike DocuSign’s double-digit post-earnings rally, CrowdStrike can’t seem to draw in the buyers.

That said, DocuSign stock has been consolidating for almost a year. CrowdStrike’s consolidation has “only” lasted about six months.

Others in the space has been trading in a similar fashion, like Datadog  (DDOG) - Get Report and Palo Alto Networks  (PANW) - Get Report. However, NortonLifeLock  (NLOK) - Get Report has been ripping higher lately.

Can CrowdStrike stock find its footing and push through resistance or are shares like to remain range-bound for the time being?

NortonLifeLock is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NLOK? Learn more now.

Trading CrowdStrike

Daily chart of CrowdStrike stock.

Daily chart of CrowdStrike stock.

Some investors will critique technical analysis. They’ll argue that it’s a bunch of lines drawn on a chart, which is severely inadequate vs. fundamental analysis. In reality, using a mix of both analyses is the most optimal.

I view the technicals as a way to measure sentiment, seeing where buyers and sellers are eager vs. when they’re growing tired. It's also a great way to see where both groups see “value” in their respective position.

In the case of CrowdStrike, buyers have clearly grown tired near $225 but are ready to gobble up the stock near $180.

Shares were recently rejected from the $225 area as the stock now works on its fifth straight daily decline.

That’s a bit discouraging, but on the plus side, support is coming into play near a cluster of moving averages. Specifically, the 10-week and 21-week moving averages are buoying the stock.

For aggressive traders, they’re likely buying the dip. More conservative traders may wait for a test down to the 21-day and 50-day moving averages near $203 before taking on a long position.

However, if these moving averages fail to support CrowdStrike stock, sub-$200 could be in play, putting range support near $180 on the table.

On a rebound, see how the stock handles $225 resistance. Above $227 could put $251 in play.