COGNIZANT TECH SOLUTIONS-A (NASDAQ:CTSH) – A Strong Technical Setup with Breakout Potential

COGNIZANT TECH SOLUTIONS-A (NASDAQ:CTSH) has been identified as a strong technical breakout candidate by our screening process. The stock currently holds high ratings in both technical health and setup quality, suggesting potential for further upside. Below, we examine the key factors contributing to this assessment.

Technical Strength

• High Technical Rating (9/10): CTSH demonstrates strong technical health, with both short-term and long-term trends in positive territory. The stock has outperformed 74% of the market over the past year.
• Support Levels: Multiple support zones exist, including a key area between $77.77 and $80.25, formed by moving averages and trendlines. This provides a cushion against downside risk.
• Relative Strength: The stock ranks favorably within its industry (IT Services), outperforming 61% of peers.

Setup Quality

• Consolidation Pattern: CTSH is forming a bull flag, a continuation pattern often seen after a strong upward move. This suggests a potential resumption of the uptrend.
• Reduced Volatility: Recent price action has tightened, indicating a possible breakout point. A recent pocket pivot signal—a bullish volume pattern—adds further confirmation.
• Low Overhead Resistance: Minimal resistance lies above the current price, increasing the likelihood of a breakout. The nearest resistance is at $84.28.

Trade Considerations

• Entry Point: A breakout above $81.64 could serve as a potential entry.
• Stop Placement: A stop-loss below $78.47 (near the 10-day low) limits downside risk.
• Risk/Reward: The setup presents a manageable risk of ~3.9% with room for upside if the breakout holds.

For a deeper look at the technicals, review the full ChartMill Technical Report.

Our Technical Breakout Setups screener updates daily with new potential opportunities.

Disclaimer

This is not investment advice. Always conduct your own analysis and consider risk management before trading.