Cybersecurity giant CrowdStrike (CRWD) saw its shares take a notable hit on Wednesday, retreating from a recent record high. The decline followed the company’s release of a quarterly revenue outlook that fell below Wall Street’s optimistic estimates. Despite reporting better-than-expected earnings for its latest quarter and announcing a substantial $1 billion share repurchase program, investors reacted to the weaker guidance, pushing the stock down nearly 6% to approximately $461. This recent drop comes even as CrowdStrike has enjoyed a remarkable year, with its stock gaining 50% over the past 12 months. This recovery is particularly impressive given that it includes bouncing back from a widespread outage of Windows PCs last July, caused by an erroneous software update.
Bullish Momentum Tested After Earnings
Just prior to Wednesday’s slide, CrowdStrike shares had been trending sharply higher, breaking out from an ascending triangle pattern to achieve an all-time high earlier in the week. This strong upward move coincided with the stock’s Relative Strength Index (RSI) nudging into overbought territory, a signal that a pullback might be due. The release of the cybersecurity provider’s softer outlook put this recent bullish momentum to a significant test. After forming two closely aligned troughs just below its 200-day moving average, CrowdStrike has indeed shown a strong upward trajectory, albeit on somewhat subdued trading volume leading up to the breakout. Now, as the market digests the latest guidance, it’s crucial for investors to understand the technical landscape and identify key price levels that could influence the stock’s next move. [This is the ideal location for your chart. You would embed the TradingView.com chart here. The provided caption Chart by TradingView would be placed directly below the chart image.]
Major Support Levels to Watch
As CrowdStrike shares navigate this fresh bout of selling pressure, three major support levels stand out on the chart where the stock may find buyers:
- Around $455: This is the first critical lower level. This area is likely to provide significant support as it aligns closely with the top trendline of the ascending triangle pattern from which the stock recently broke out, as well as a prominent swing high established in February. A bounce here would indicate the previous breakout level is now acting as strong support.
- The $390 Level: Should the stock close decisively below $455, the next potential retrace point is around $390. This level is supported by a key trendline that has connected several peaks formed between December and April, suggesting it could attract buying interest.
- Around $340: Further substantial selling could open the door for a drop to approximately $340. This region sits just above the notable troughs formed in March and April and is also close to a series of lows that developed on the chart from late November to early January. Its proximity to these past lows suggests it could act as a longer-term floor for the stock.
Key Overhead Area to Monitor
If CrowdStrike shares manage to stabilize and resume their longer-term uptrend, investors will need to watch for a key overhead resistance area. This can be projected using the measured move technique, also known as the measuring principle. By calculating the distance between the ascending triangle’s two trendlines at their widest point and adding that amount to the pattern’s breakout area, we can project an overhead target of $510. This level would likely represent a significant test for bulls aiming to push the stock to new highs.
Conclusion
CrowdStrike’s latest earnings report and guidance have certainly put its impressive bullish momentum to the test. While the stock’s long-term performance remains robust, its immediate future will likely hinge on how it interacts with these critical technical levels. Investors should closely monitor price action around the identified support zones and the overhead resistance at $510 to gauge the stock’s next significant move.
