Cloudflare: Keep Your Feet on the Ground or Chase the Breakout?

How far can NET’s surge carry?


Aug 05, 2022 | 09:50 AM EDT

Stocks quotes in this article: NET

The stock of Cloudflare (NET) is up sharply Friday morning after the company that acts like a giant VPN gave upbeat guidance. Let’s check on the charts to see how far this surge can carry.

In the daily bar chart of NET, below, we can see that the shares made a low in June and were moving higher ahead of Friday’s gap higher. NET is trading above the bottoming 50-day moving average line. The slope of the 200-day line is negative and it intersects up around $105.

The On-Balance-Volume (OBV) line shows some uneven progress from the middle of June. The Moving Average Convergence Divergence (MACD) oscillator is edging above the zero line for an outright buy signal.

In the weekly Japanese candlestick chart of NET, below, we can see some positive clues. It looks like the $45 area is now a zone of support.

The weekly OBV line shows some slight improvement in July after a long decline. The MACD oscillator has crossed to the upside for a cover shorts buy signal.

In this daily Point and Figure chart of NET, below, we can see a price target in the $82 area.

In this weekly Point and Figure chart of NET, below, we can see a target in the $79 area.

Bottom-line strategy: NET is gapping higher Friday, but weakness in the broader market averages could drag NET lower in the days ahead. Even though the Point and Figure charts suggest bigger gains I would not recommend purchase of NET shares. This is not the time to chase upside breakouts.

Get an email alert each time I write an article for Real Money. Click the “+Follow” next to my byline to this article.

More from Stocks

Real Money’s message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site’s moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email sent

Thank you, your email to has been sent successfully.


We’re sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

Please Join or Log In to Email Our Authors.

Email Real Money’s Wall Street Pros for further analysis and insight

Already a Subscriber? Login

 » Read More  » Read More

Tags: No tags

Comments are closed.