Squarespace Inc. (SQSP) recently saw a surge in its stock price after announcing an increase in guidance for 2024. However, from a technical standpoint, the real significance lies in the completion of a “big base breakout” pattern. This pattern suggests the potential for significant gains in the upcoming months.
Looking at the weekly chart, we can see that since its IPO in May 2021, Squarespace experienced a rapid rise to $65, followed by a consistent downtrend that bottomed out at $14.40 in May 2022. Over the next year, the stock slowly recovered, reaching $33 by April 2023, which coincided with a 38.2% Fibonacci retracement level. This $33 mark acted as a strong resistance point throughout 2022 and 2023 until it was finally broken in March of the current year.
The daily chart reveals that the $33-34 range was repeatedly tested throughout 2023 and early 2024. This frequent testing of the upper resistance level is a characteristic of a “big base breakout” pattern. The more times a resistance level is tested, the more significant the subsequent breakout is expected to be.
Using the height of the $27 to $34 range as a basis, a minimum upside target of $41 can be projected from the breakout level. This would mark a level not seen since November 2021. Furthermore, the 61.8% Fibonacci retracement suggests a resistance level around $45.60, indicating a potential 20% gain from the current levels.
Currently, Squarespace is trading above two upward-sloping moving averages, and the Relative Strength Index (RSI) shows a positive momentum trend in 2024. As long as the stock continues to form higher lows with improving relative strength, it may present an attractive opportunity for investors.
The breakout pattern exhibited by Squarespace Inc. signifies a potential for significant gains in the near future. Investors should closely monitor the stock’s performance, considering the technical indicators and breakout levels discussed. However, it is essential to conduct thorough research and seek advice from financial advisors before making any investment decisions to ensure compatibility with individual circumstances.