Charts suggest software stock is forming a significant base breakout, indicating more gains to come.

Investors have driven Squarespace Inc. (SQSP) higher as the company recently raised its guidance for 2024. However, the technical analysis suggests a more significant story as the stock appears to have completed a “big base breakout” pattern, indicating potential for further gains in the coming months.

The weekly chart shows that after its May 2021 IPO at $50, Squarespace reached a peak around $65 before entering a downtrend that bottomed out at $14.40 in May 2022. By April 2023, the stock had recovered to around $33, which coincided with a 38.2% Fibonacci retracement level. This resistance at $33 continued to hold until March 2024 when SQSP finally broke above it, turning it into a support level.

The daily chart reveals the frequent testing of the $33-34 range throughout 2023 and early 2024. According to technical analyst Alan Shaw, the more a resistance level is tested, the more significant the subsequent breakout. By calculating the height of the basing pattern, analysts project a minimum upside objective of $41 and a potential resistance at $45.60, indicating a 20% gain from current levels. With Squarespace currently above its moving averages and showing positive momentum, it may be worth considering for investors.

Overall, Squarespace’s technical analysis suggests a breakout from a significant base, potentially leading to further gains in the coming months. Investors may want to keep an eye on this stock as it continues to make higher lows and show improving relative strength in 2024. As always, it is important to consult with a financial advisor before making any investment decisions to ensure they align with your individual circumstances.