DocuSign Plummets 40%: A Technical Breakdown

DocuSign Plummets 40%: A Technical Breakdown

Docusign Inc. DOCU shares are trading sharply lower Friday after fourth-quarter revenue and guidance came in below estimates.

Fourth-quarter revenue is expected to be between $557 million and $563 million, while analysts were expecting revenue of $573.8 million. FY22 revenue is predicted by the company to be between $2.083 billion and $2.089 billion, while analysts expected full-year 2022 revenue of $2.09 billion.

JPMorgan is one of several firms to downgrade the stock with analyst Sterling Auty rating it Underweight with a $175 price target, implying a 25.2% downside to Thursday's closing price of $233.82.

DocuSign was down 42.22% at $135.09 at market close Friday.

See Also: Why DocuSign Shares Are Trading Lower

DocuSign Daily Chart Analysis

  • Shares saw a huge drop off below support in what technical traders call a descending triangle pattern.
  • The $190 price level is an area where the stock has been able to hold as support many times in the past, but may eventually become resistance if the stock is ever able to reach this area once again.
  • The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock is likely facing a period of bearish sentiment.
  • Each of these moving averages may hold as a potential area of resistance in the future.
  • The Relative Strength Index (RSI) plummeted lower and now sits at 13 on the indicator. This is extremely low and shows there are mainly sellers in the stock now as most buyers have turned into sellers following the news.

What’s Next For DocuSign?

Bullish traders need to see a bounce, then are looking for the stock to begin to make higher lows. Higher lows are key for the stock to start to recover from the large gap down. Bulls eventually would like to see the $190 level broken at some point in the future.

Bears took control of the stock as it saw the large dump and are looking to see the price continue to fall throughout the next few weeks. Bears are looking to see the stock begin to form lower highs and hold below moving averages for the price to stay in the bearish trend.

Photo: Courtesy DocuSign

Posted In: JPMorganSterling AutyAnalyst ColorEarningsNewsGuidanceDowngradesPrice TargetTechnicalsAnalyst RatingsMoversTrading Ideas