Barracuda Stock Is on the Verge of a Breakout

CUDA stock
Credit:iStock.com/denphumi

CUDA Stock: All Set to Stage a Price Advance

I am quite intrigued and excited about the prospects of Barracuda Networks Inc (NYSE: CUDA) stock because it seems to be making strides. A number of indications have swung into bullish alignment, which just happens to coincide with the constructive price action suggesting that CUDA stock could be in the midst of a move towards higher stock prices.

This potentially bullish view on Barracuda stock was generated using technical analysis. This method of analysis is based on analyzing historical price and volume data in order to speculate on what the future may bring. I have spent nearly two decades devoting myself to this method of analysis and have become quite proficient in this craft.

The following Barracuda stock chart illustrates the indications that have swung into bullish alignment and the constructive price action suggesting that the current path of least resistance is geared towards higher CUDA stock prices.

Barracuda stock chart

Chart courtesy of StockCharts.com

This CUDA stock chart uses a weekly scale because it serves to smooth out signals, adding credence to them when they are generated.

For instance, let’s begin with the moving average convergence/divergence (MACD) indicator located on the lower panel. MACD is a trend-following momentum indicator that uses the crossing of a signal line to determine whether bullish or bearish momentum is influencing the stock price. This indicator is very significant because, in order to attempt an advance or a decline, the required momentum is needed.

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In February 2016, a bullish MACD cross was generated, which implied that bullish momentum was influencing the stock price. This bullish momentum paved the way towards higher stock prices, and while this indication was engaged, CUDA stock more than doubled as the share price appreciated from $11.00 to a high of $26.69.

In November 2016, the bullish cross gave way to a bearish cross, indicating that bearish momentum was influencing the stock price. The bearish pressure acted to contain Barracuda stock from advancing.

In June 2017, the MACD indicator crossed once again, indicating that bullish momentum is now influencing the trading action, which favors higher CUDA stock prices.

These bullish and bearish indications have supported the constructive price action, which has been an instrumental helping hand in creating and sustaining the bullish trend.

Constructive price action consists of impulse waves (highlighted in green), and consolidation waves (highlighted in purple).

Impulse waves serve to define the stage in a bullish trend where the stock generates most, if not all, of its gains. This is characterized by a swift linear move towards higher prices. The impulse wave on the CUDA stock chart above has coincided with a bullish MACD cross, illustrating that bullish momentum is required to stage a stock price advance.

Consolidation waves serve to define the stage in a bullish trend where any overbought conditions that were created during the preceding impulse wave are alleviated. Alleviating an overbought condition creates the necessary environment for a new advancing impulse wave to develop. The consolidation wave on the Barracuda stock chart has coincided with a bearish MACD cross, illustrating that bearish momentum prevents the stock price from advancing.

The bullish MACD cross that was generated in June of this year is suggesting that the path of least resistance is geared towards higher stock prices, which is a ripe environment for an impulse wave to develop in. It looks as though Barracuda stock has just exited the consolidation wave in an upward direction, suggesting that an impulse wave is now likely to develop.

Taking a closer look at the price action will help shed some light on the situation, and the following CUDA stock chart focuses on the potential breakout using an hourly scale.

CUDA price chart

Chart courtesy of StockCharts.com

This Barracuda stock chart illustrates the constructive price action that is occurring on the intra-day level.

Barracuda stock has created a tight range between $24.50 and $23.80, and it is defining the consolidation wave that is currently in development. A break above $24.50 or a break below $23.80 will dictate which direction the stock is heading in next.

I am looking for a break above $24.50 because it will suggest that an impulse wave is in development, which is in line with the indications that were generated using the weekly chart.

Analyst Take: 

The price action on the CUDA stock chart is constructive and a key internal indicator is in bullish alignment. These indications suggest that Barracuda stock is geared towards higher stock prices, and therefore a bullish view on this investment is warranted.