What to look out for in the Salesforce stock market before earnings reports?

What you need to know

• The cloud-software company, Salesforce, is expected to release its results for the quarter after Tuesday’s market close.
• Between November 2021 and this November, the stock charted a cup and handle formation that was textbook before it broke out over last month’s bullish chart.
• Salesforce’s chart shows important levels of support around $312 and $270. The price target is $500.

This week, Salesforce shares (CRM), the cloud-based software company will release their quarterly earnings report following the close of the markets on Tuesday.

Analysts predict that software makers will post a 7 percent increase in revenues year-overyear (YOY), fueled by the demand for their generative artificial (AI) offerings.

Investors will be looking for updates on the demand of the recently released Agentforce platform. This allows customers to create and deploy AI-powered agents capable of autonomously making informed decisions and performing various business functions.

At midday Monday, shares of Salesforce were slightly higher at $332. The stock has gained 26% since the start of the year, in line with the S&P 500's increase over the period.

In the following section, we examine the Salesforce chart in more detail ahead of its quarterly earnings report. We also identify the important price levels that are worth keeping an eye on.

Cup and Handle Pattern

Between November 2021 to November of this year, Salesforce’s shares formed an ideal cup-and-handle pattern before breaking above the bullish charts last month.

The stock, however, reversed its trend last week and retraced to the highest point of this formation. This suggests that investors are cautious ahead of software makers’ quarterly results.

Before the earnings report of a company, we can use its chart to project a possible price increase.

Watch for Important Support Levels

Around $312 is the first support level below that. The upper trendline of the cup-and-handle pattern could be a potential buying area in this chart. It may change from being a resistance to a future support.

Bulls failing to protect this level may see shares falling to $270. At this price, there is a trendline on the chart that links a number of similar levels between August 2020 and August 2018.

If the drop is more severe, it could lead to a new test of support at $232. Investors should look to find buy-and hold entry points in this region, close to the horizontal line linking multiple peaks and valleys of the chart going back as far as September 2020.

The Upside Down Price Target

The measuring principle is a technique that uses charts to analyze the price movements of the previous stock in order to forecast future changes.

We measure the depths of the handle and cup to determine the Salesforce chart. “cup” Add that figure to the top trendline of the pattern. We add $188 on top of $312 to get a target price of $500. This is a range where investors who bought the stock earlier may want to lock-in profits.

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