Squarespace Inc. (SQSP) has recently garnered attention from investors as it pushed higher to retest its April high following an announcement of raised guidance for 2024. However, the real story lies in the technical analysis of the stock’s movement. The weekly chart reveals a pattern known as a “big base breakout”, indicating the potential for significant gains in the coming months. The stock’s journey since its May 2021 IPO at $50 to its peak around $65, followed by a downtrend to a low of $14.40 in May 2022, demonstrates the formation of a solid base. Subsequent peaks hitting a resistance level around $33, which was eventually broken in March of this year, further solidifies the pattern.
Looking at the daily chart, we can see how the $33-34 range was repeatedly tested throughout 2023 and early 2024. An essential characteristic of a “big base breakout” is the frequent testing of the upper end of the trading range, as it indicates a stronger breakout. By applying the conventional approach of measuring the height of the pattern and projecting it from the breakout level, we can estimate a minimum upside objective around $41, a level not seen since November 2021. Furthermore, the 61.8% Fibonacci retracement suggests additional resistance around $45.60, indicating a potential 20% gain from current levels.
Currently, Squarespace is positioned above two upward-sloping moving averages, and the RSI indicator reflects a positive momentum trend in 2024. As long as the stock continues to make higher lows and show improving relative strength, it may present an attractive opportunity for investors. The concept of “polarity”, where a previous resistance level becomes a new support level after a breakout, further supports the bullish outlook for SQSP in the near future.
While the technical analysis paints a favorable picture for Squarespace, it is essential for investors to conduct their own due diligence before making any financial decisions. The information provided in this analysis is for informational purposes only and should not be construed as financial, investment, tax, or legal advice. Each individual’s circumstances are unique, and what may be suitable for one investor may not be suitable for another. Consulting with a financial or investment advisor is recommended before making any investment decisions.
The recent developments in Squarespace Inc. (SQSP) demonstrate the potential for significant gains based on technical analysis. The “big base breakout” pattern and positive momentum indicators suggest a bullish outlook for the stock in the coming months. However, it is important for investors to exercise caution and seek professional advice before making any investment decisions.