Don't Ignore This Chart!

Palo Alto Readies for its Next Move


Palo Alto Networks (PANW) is a leading cyber-security stock that fits into the technology sector. Needless to say, the Technology SPDR (XLK) and the EW Technology ETF (RYT) are the leading sectors here in 2019. PANW took a break with a consolidation over the last eight weeks, and this could be the pause that refreshes.

First and foremost, PANW hit a new high in early March and is well above the rising 200-day SMA. The long-term trend is clearly up. The stock is also a leader in 2019 because it recorded a 52-week high this year.

The stock surged some 50% from late December to early March and became quite extended (overbought). There are two ways to work off overbought conditions: trade sideways or pullback. At this point, it looks like PANW is taking the former path with a triangle consolidation. This amounts to a bullish continuation pattern and a breakout would open the door to further gains.

The indicator window shows RSI moving above 70 for an extended period as the stock became overbought and remained overbought. This shows strong and sustained buying pressure, and this is bullish overall. The move back to the 40-50 zone reflects a momentum correction as RSI moved back towards its centerline.

Arthur Hill, CMT
Senior Technical Analyst,
Author, Define the Trend and Trade the Trend

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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