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CrowdStrike Hits New Highs on Earnings - Where From Here?

CrowdStrike is ripping to all-time highs on earnings. Can the rally last? Let's turn to the charts for some upside targets.

It’s a good day for CrowdStrike  (CRWD) - Get CrowdStrike Holdings Inc. Report bulls, with the cybersecurity specialist's shares up 15% to new highs.

The move comes after better-than-expected earnings and amid a somewhat busy earnings week.

The Sunnyvale, Calif., company's shares dipped a bit on Tuesday and Wednesday, falling roughly 3.8% in both sessions. The move came after a pandemic favorite — Zoom Video  (ZM) - Get Zoom Video Communications Inc. Report — beat on earnings but saw a punishing post-earnings decline.

CrowdStrike is not necessarily an outright play on the coronavirus, but it does benefit from the increasing demand for cybersecurity.

To get such a solid rally on the day, CrowdStrike delivered better-than-expected earnings along with a revenue beat, as sales grew 86% year over year. Even better, management provided an upbeat outlook for the fourth quarter and full year.

The stock is now receiving price-target boosts from the analyst community. 

Now traders want to know just how high CrowdStrike can rally. Let’s look at the chart.

Trading CrowdStrike Stock

Daily chart of CrowdStrike stock.

Daily chart of CrowdStrike stock.

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When the rest of the tech sector was surging into September, so too was CrowdStrike. The stock burst up toward $155 before sharply reversing.

While “blow-off tops” can be tough to manage, we saw some encouraging price action follow. 

Specifically, the stock quickly pulled back over the next few days - although that pullback was greeted by support near $118, which had been resistance.

When former resistance turns to current support, it is very bullish for the stock.

In October, $155 again acted as resistance, while later in the month and again in November, the $118-to-$120 area supported CrowdStrike stock.

What we want to see now is $155 act as support, should the stock dip from its post-earnings rally. In a sense, we already saw that, with Thursday’s low of $155.54.

If that’s the case and $155 is indeed support, the setup for CrowdStrike looks bullish as we head into year-end.

On the upside, I want to see whether the shares can get to the two-times range extension, near $172. Above that opens the door to a possible longer-term target of $200, with the 261.8% extension up near $215.

On the downside, the bulls really need to see the $155 level hold as support. Below $155 and the 10-day moving average puts the 50-day moving average on the table.