What to Watch Out For After Salesforce Stock’s Post-Earnings Plunge [Video]

Salesforce (CRM) shares plunged more than 16% in after-hours trading on Wednesday after the cloud-based software company reported its first quarterly revenue miss in 18 years and issued weak annual sales guidance amid enterprise customers reining in their IT budgets and longer-than-average deal cycles. We take a look at the chart and identify two key levels where buyers may step in to defend the price.

Salesforce shares trended steadily higher for 12 months following the 50-day moving average (MA) crossing above the 200-day MA in March last year to form a bullish golden cross pattern. However, since topping out in March this year, the price has fallen below the 50-day MA, with the indicator also acting as a line of resistance during a recent countertrend rally earlier this month. Moreover, expected earnings-related selling on Thursday will likely confirm a head and shoulders, a chart pattern that indicates a possible market top.

Looking …