Since hitting a low of $72 on March 15, DocuSign Inc. ( NASDAQ:DOCU ) has been rising. At the bottom, stocks were massively oversold, with an RSI reading of 25. Recent gains renew hopes that stocks’ downtrend is ending.
So far, DocuSign has gained more than 42% in a month, beating an 8.97% average return on the tech-heavy Nasdaq-100 in the same period. But how far can you go?
DocuSign enjoyed stellar gains in the growing remote workforce in the era of the pandemic, with trends driving the stock price to the $300 level. However, like its peers, the leader in electronic firms experienced a sell-off as investors judged that its good days were coming to an end.
Coupled with expectations of policy tightening by the Federal Reserve, stocks fell below a pre-pandemic low, establishing support at $72. The company now expects revenue of $579 million to $583 million in the first quarter of 2022, up from revenue of $580.8 million in the fourth quarter of 2021. Investors appear to have priced in the pre-pandemic environment, evidenced by recent stock gains.
Moving averages about to join DOCU support
Technically, DOCU is emerging from the ruins of a market sell-off. At the current level of $104, the stock is up 44% from the bottom of $72. The price is also at the same level as the 20 and 50 day moving averages, which are apparently looking to join support.
Although the stock has found resistance at the current level, we believe that the next established resistance is at $156. This presents a 50% return potential for investors. The stock will also face minor resistance at $128.
DocuSign is a buy at the current level and could go as high as $156. The stock could face additional resistance at $128. DOCU could struggle to hit the $300 highs.
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