Hi everyone. Today I’ll be looking at a company which engages in providing team collaboration and productivity software:
Atlassian Corporation (NASDAQ: TEAM)
TEAM’s monthly chart is forming a possible inverse head and shoulder pattern with the shoulders forming at the 165.51 pivot.
On the weekly chart, we can see that TEAM has been making higher highs and lows ever since it IPO’ed in 2016. The support trendline (in green) has held firm since Dec’16.
It is currently trading in an ascending channel (in blue) since it retested its trendline support in Oct’22. While TEAM has hit the channel support trendline, it closed with a bearish marabozu candle, which suggests more downside next week. For the inverse head and shoulder pattern to be valid, TEAM will need to hold the 165.51 level.
On the daily chart, we can see a falling wedge forming from the channel resistance trendline all the way back into support. Given the weekly close, I am expecting TEAM to fake retail out below 165.51, forming a lower low in the process and (most likely) forcing a bullish divergence on the daily chart before pushing higher. If this happens, then TEAM will push towards the unfilled gap at 278.25-279.36 over the next few months and eventually complete the inverse head and shoulder pattern by heading above 300.
However, in the event that TEAM breaks down from this ascending channel, then it could invalidate the inverse head and shoulder setup. It will most likely retest prior support at 145.21 and strong support at 132.56.
For as long as TEAM can hold over 165.51, risk-to-reward is better for bulls. In light of a favourable technical setup, I am initiating coverage on TEAM with a BUY sentiment.
Sentiment: BUY (New)
Summary (with Price Targets - NFA):
Inverse head and shoulder setup with shoulders at 165.51 and trading in an ascending channel since Oct’22, with the stock back at the support trendline
Provided 165.51 holds, the measured move would be towards the 278.25-279.36 gap, and subsequently the completion of the inverse head and shoulder pattern above 300
If 165.51 is lost, then it is likely to retest supports at 145.21 and 132.56
All right, that’s it for this newsletter. Till next time!
$Atlassian Corporation PLC(TEAM)$ $Twilio(TWLO)$ $Zoom(ZM)$ $SPDR S&P 500 ETF Trust(SPY)$ $iShares Russell 2000 ETF(IWM)$
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