A rising wedge pattern has emerged in the chart of Upwork Inc (UPWK). This is considered a bearish pattern, which means traders should be prepared for a down move in the stock.
UPWK is a United States-based company that operates an online marketplace that enables businesses to find and work with highly-skilled independent professionals.
The company benefited significantly from the 2020 work-from-home trend boom and shows no sign of slowing down. Its third quarter sales were up 25% year over year. As people continue to work from home and more companies hire contractors, UPWK should see continued growth.
UPWK had $155 million in cash as of the end of the last reported quarter, compared with only $27 million in long-term debt. Though the company is not profitable with a negative net margin.
Sales are expected to rise almost 20% this year, but the stock’s valuation is quite high with a Price to Sales ratio of 16.5.
The stock has shown strong momentum over the near, mid, and long-term. This has led to a B Momentum grade in our POWR Ratings system. Its overall rating is Neutral though.
Take a look at the 1-year chart of UPWK below with the added notations:
Chart of UPWK provided by TradingView
UPWK has formed an up-trending resistance line and an up-trending support level. These two lines are converging on one another to form a rising wedge pattern, which is considered a bearish pattern.
A short trade could be entered on a break of the wedge’s support line, which currently sits near $46.
Want to Discover More Great Trades?
I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.
That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!
Have a good trading day!
Christian Tharp, CMT
UPWK shares were unchanged in premarket trading Wednesday. Year-to-date, UPWK has gained 37.72%, versus a 2.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock.Be Prepared for a Reversal in Upwork appeared first on StockNews.com