DocuSign (DOCU) Bounces Off Support Again

DocuSign, Inc. (DOCU) provides cloud-based electronic signature solutions. Its cloud based electronic signature platform helps companies and individuals securely collect information, automate data workflows and sign anything. The firm automates manual, paper-based processes allowing users to manage all aspects of documented business transactions including identity management, authentication, digital signature, forms and data collection…

Take a look at the 1-year chart of DocuSign (NASDAQ: DOCU) below with added notations:

DOCU has created a major level of support at the $190 (green) mark over the past year. The stock made it down to that level yesterday and got yet another bounce higher. However, if support were to break, lower prices will likely follow for DOCU.

A trader could enter a long position at or around $190 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT