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:
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.
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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.
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