Great Setup For a Swing Trade

Duolingo has had poor performance the past few months compared to other big tech names. More recently, after a roughly 30% correction, the technical picture is starting to look more bullish. Is it time for DUOL to catch some upside?

Notice how the price action is consolidating near a long-term support line that has pushed up the share price for over a year. Also, notice how the price is just above the previous highs printed several months ago. If there is ever a good place for a rebound, then technically speaking, previous highs would be a solid place to watch for a rebound.

The price action  has been confined within a wide price channel  over the past few weeks. A breakout above this channel would be quite bullish. Personally I would strongly consider entering into long positions at that point.

Recently, the price dipped just below the long-term support line that I mentioned, and a swift rebound quickly followed. There was big volume associated with the rebound so the uptick appears to have some substance to it.

To add to the bullish sentiment, there is a bullish divergence transporing in the charts with daily candles. The price action has recently made lower lows while MACD and RSI are making higher lows. This could be a sign that the current downtrend is losing some of its strength.

Generally speaking, things looks good for the company. The long-term trend in its share price is upward. I believe that this trend will continue. After a 30% correction the price is relatively cheap. Financial statements have generally been showing a trend of improving numbers, like revenue, margins, net income, etc.

The technical setup looks almost perfect for a bullish swing trade. Once the price climbs above the price channel I mentioned, then I would likely be buying calls at that point. If the price dips below the long-term support that I mentioned, then I would exit any long positions. I might even consider a short position at that point if there is a legitimate negative catalyst of some sort.

As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Don't invest money that you can't afford to lose. Give some of your investments time and know when to cut your losses.

Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.