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Check Point (CHKP) Pulls Back Sharply to Initiate Consolidation Period

Cybersecurity $CHKP firm, Check Point Software $CHKP has been bullish since late 2018 pushing to fresh all time highs by February and continued to do so into April. However, I think the market is is pumping the brakes on this name.

CHKP Daily Chart

(click to enlarge)

Bullish Market:
- First of all, Check Point was bullish going into late 2017.
- We can see that price was in consolidation mode by early 2018.
- Still CHKP maintained a bullish stance as it made a higher high in September, and a higher low in December when compared to the key highs/lows from late 2017 and first half of 2018.
Consolidation Ahead?
- The rally from December (just below $100/share) has been sharp.
- It even follows a conventional primary Elliott Wave count and structure.
- However, the rally has become a bit more choppier since March, and has developed a bearish divergence with the RSI.
- Today's price action was also very bearish, engulfing the recent price action. 
- This engulfing bearish candle suggests CHKP is now entering a period of consolidation.
- What kind of consolidation will this be? 
- I think we can anticipate a push towards $120. This $119-$121 area was a previous resistance area and provides the first support.
- The next key support will likely be around $114, where the 200-day simple moving average resides. 
- I think in the bullish outlook, we should expect price to hold above $108, but I don't think price will get there if the market is indeed bullish.
- We should also monitor the RSI as it nears 40. If the market is going to maintain a bullish momentum and push into fresh highs, it would probably hold the RSI above 40. Otherwise, we might get a longer period of consolidation, where downside risk might grow.



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