Docusign Stock: DOCU bulls edge toward previous resistance

FX
  • Since June 3 earnings, DOCU stock has soared.
  • Docusign shares now face critical resistance.
  • DOCU stock is flat in Tuesday’s premarket.

After a parabolic rise that saw Docusign (NASDAQ: DOCU) stock break out of its YTD descending price channel last week, the e-signature titan now approaches plenty of resistance between $262.65 and $268.80. Shares of Docusign closed at $257.26 on Monday, June 14.

Docusign stock price: Can DOCU continue the earnings bounce?

Docusign had been suffering from quite the seasonal decline alongside other top-40 growth favourites. Since the close at $265.16 on February 19, DOCU fell into a descending channel that carried it downhill to a low of $179.49 in mid-May, a decline of more than 32%. The DOCU share price was saved by June 3 earnings that provided a nearly 60% non-GAAP EPS beat to entice the market back into buy mode. 

The stock popped almost 20% during the following session and has registered green daily candlesticks for six of the seven sessions post-earnings. DOCU is currently near the top end of a supply zone that extends from $250 to $260.Above $260, the stock will face headwinds between $262.65 and $268.80 where it faced trouble back in January and February, as well as September of 2020. And if it makes its way through this jungle, then only the $290.23 high from September 2 of last year stands in its way.

If DOCU stock corrects off the supply zone above $260, then support can be found near $234 – the double top from April. Below here there should also be support at $212.31, where the 20-day Simple Moving Average (SMA) crossed above the 50-day SMA. Since the Relative Strength Index (RSI) is at 76, it would seem that a correction is likely. The last time the RSI was in overbought territory was that high from September 2, after which it experienced an extreme pullback. At a market capitalization of $50 billion, DOCU is trading at about 25 times fiscal 2021 revenue guidance. Analyst consensus, however, thinks the stock is still undervalued with an average price target of $272.61.

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