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News

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News

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Asset Watch

Are the bulls running with Shopify?

Tuesday, September 5, 2023

In a landmark deal, Shopify announced on Aug. 30 that “Amazon will be releasing an app in Shopify’s app ecosystem” that allows U.S. merchants to “add Buy with Prime into their Shopify Checkout.” And to top it all off, Prime members will also enjoy “fast, free delivery, and easy returns outside of Amazon for the first time ever.”
So, with the partnership poised to boost traffic on merchants’ websites, more online purchases should mean more commission revenues for Shopify. Unsurprisingly, the stock responded positively, jumping by more than 10% on Aug. 31. However, should we expect further upside?
The grey lines below show how Shopify has traded in an ascending channel since the October 2022 low, with higher highs and higher lows largely present throughout the upswing. Outside of the breakdown that occurred in August, Shopify’s rising support line and 20-week moving average have aided the bulls.

The latter ended the corrections in October and December 2022, as well as March 2023. Similarly, trendline support helped elicit a bounce in May 2023. Therefore, with the stock ending last week above both technical milestones, the medium-term outlook remains constructive.

 

More importantly, a rally to the upper trendline puts $75 in play, which offers a roughly 12% upside from the Sep. 1 close. In contrast, 20-week MA support is near $60.

 

Is another higher high in store for Shopify, or should you wait for a pullback before opening a position?


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