Shares of the data analytics software company, New Relic (NEWR) bucked the broader market trend closing up over 5% in Wednesday’s session. Technical resistance was broken and the stock looks prepared to make new all-time highs.
The weekly chart reflects the wide weekly and intermediate term price swings in the price since it first became publicly traded in late 2015. Those swings have formed a large cup-and-handle pattern on this timeframe with resistance in the $40.00 area. The handle portion of the pattern was completed this year and the highs are once again been tested. Accumulation/distribution is tracking higher over its 21 period signal average and the relative strength index has moved above its centerline, a positive combination of price and money for momentum.
On the daily time frame, several fractal versions of the weekly cup-and-handle pattern have formed with shared rim resistance in the $37.50 area. That mutual resistance level was broken Wednesday with a surge in upside volume more than 300% greater than the 50 day moving average of volume. Chaikin money flow is in positive territory and moving average convergence/divergence is making a bullish crossover above its center line. The most recent of the smaller fractal cup and handle patterns projects up through the $40.00 level, but the intermediate and the weekly patterns project substantially higher.
The stock offers a good risk/reward ratio at its current level using an initial percentage stop under the $37.50 rim line resistance-turned-support level.
(This article was published on TheStreet.com this morning.)