Since touching a low of $72 on March 15, DocuSign Inc. (NASDAQ:DOCU) has been going higher. At the bottom, the stock was massively oversold, with an RSI reading of 25. The recent gains renew hopes of an end to a bearish run for the stock.
So far, DocuSign has gained over 42% in a month, exceeding an average return of 8.97% in the tech-heavy Nasdaq-100 in the same period. But how far can it go?
DocuSign enjoyed stellar gains on the growing remote workforce in the pandemic era, with the trends driving the share price to the $300 level. However, just like peers, the e-signature leader experienced sell-offs as investors judged that its good days were coming to an end.
Coupled with expectations of policy tightening by the Federal Reserve, the stock dipped to below a pre-pandemic low, establishing support at $72. Now, the company expects a revenue of $579 million to $583 million in the first quarter of 2022, compared to a revenue of $580.8 million in Q4 2021. Investors seem to have now priced in the pre-pandemic environment, evidenced by recent stock gains.
Moving averages about to join DOCU support
Source – TradingView
Technically, DOCU is emerging from the ruins of a market sell-off. At the current level of $104, the stock is up by 44% from the bottom at $72. The price is also at the same level as the 20-day and 50-day moving averages, which are seemingly looking to join support.
Although the stock has found resistance at the current level, we believe the next established resistance is at $156. This presents a potential return of 50% to investors. The stock will also face minor resistance at $128.
Summary
DocuSign is a buy at the current level and could rise up to $156. The stock could face further resistance at $128. DOCU could find it difficult to reach the pandemic highs of $300.
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