Hi everyone. Today I’ll be updating my TA on an enterprise AI software company:
C3.ai, Inc. (NYSE: AI)
AI’s weekly chart is interesting - notice how it is trading in a bull pennant (in green) with lower highs and higher lows. The prior 2 lower highs had significantly higher volume than the latest retest several weeks ago, which was on very low volume. It is thus likely that we might be seeing a pennant breakout in the coming weeks. Notice how RSI is also making higher highs with price, and the Stochastic closing the previous week with a bullish crossover.
On the daily chart, we can see AI coming up from extreme oversold lows on the Stochastic. RSI has also formed a “W” pattern (one small one and one large one), which usually precedes a larger move. I am looking long on AI until it reaches extreme overbought readings on the Stochastic, where it likely chops to reset the oscillator or it commences a pullback to extreme oversold levels.
So, what am I looking for in this next move?
AI needs to clear the resistances between the 31.13-33.91 area (refer to my chart) and turn them into support, as well as break over the Jun’23 resistance trendline/pennant consolidation line.
The near-term target for this move higher would be the previous lower high at 38.30. Ultimately, a successful breakout of pennant consolidation should see a longer-term move towards the 53.82-55.58 area, where we have some imbalances to fill.
However, if AI were to fail at the resistance trendline once more, it could come back into the 25.15 level to retest the bullish island gap, and form a smaller consolidation pattern within a larger one.
Do keep an eye on the trendline and the key levels I indicated above!
In light of the favourable technical setup and positioning on AI, I have left my sentiment on AI as a BUY, which was what I had indicated in my previous newsletter.
Sentiment: BUY (Unchanged)
Summary (with Price Targets - NFA):
Trading in a bullish pennant consolidation pattern that requires a break above the resistance trendline and the 31.13-33.91 to see a stronger swing move higher
Short-term target in the event of a breakout would be the prior lower high at 38.30, with a longer-term target being the series of imbalances between 53.82-55.58
All right, that’s all for this newsletter. Till next time!
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