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?
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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
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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