Earnings Play: Workday
Jason Lubin November 20, 2020 12:10 AM
Look for an upside breakout of the symmetrical triangle pattern.
Today, after market, Workday (WDAY) is expected to report third quarter EPS of $0.67 compared to $0.53 last year on revenue of approximately $1.1 billion vs. $938.1 million in the previous year. The company is a leader in enterprise cloud applications for finance and human resources, and its expected move based on front-month options is 6.8%. The last time the company reported earnings the stock jumped 12.6%.
Looking at a daily chart, in logarithmic scale, Workday's stock price has been consolidating within a symmetrical triangle pattern that began to form after the stock made a record high of 248.75 in late-August. The RSI is over 50 and appears to have broken out to the upside of falling wedge pattern that also began to form in late-August. On an intraday basis, Workday's stock price has already penetrated the upper trendline. If price can close above the upper trendline, it would confirm an upside breakout of the pattern and be a bullish signal. Next, price will likely advance towards the all-time high of 249.00. If price can get above 249.00, then its first Fibonacci target would be 287.00. On the other hand, if price does not manage to close above the upper trendline of the pattern, price could retreat back to the lower trendline. If price cannot hold above the lower trendline, then price could slip to 195.00. If price is not supported at 195.00, price could decline further to 174.00, which would be a bearish signal as price would likely be below the 200-day simple moving average.
Source: GAIN Capital, TradingView
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