Image Source: PixabayDoximity (DOCS) is one of the top 3 quality setups as discussed in this post. Similar to what we’ve observed with Unity Software (U), Doximity experienced a massive sell-off, plunging well below its previous downtrend line. Even after attempts to break out, the stock continued to form lower highs, signaling persistent bearish momentum. This series of lower highs is a classic indication that the downtrend is not yet over.However, what’s particularly interesting about Doximity’s chart is the potential for what could be described as a “reverse pump and dump.” Typically, we think of a pump and dump as a rapid rise in a stock’s price, followed by an equally quick crash. Here, we see the reverse: a sharp sell-off, followed by a gradual bottoming process. The gradient of this decline has been steadily smoothing out, hinting that the stock might be preparing to break out of its current bottoming structure.On the right side of the chart, we can see that Doximity is now challenging its immediate downtrend line. The stock is beginning to resemble an inverse head-and-shoulders pattern—a bullish indicator—suggesting that it might be gearing up for a rally. With a breakout from this downtrend, the immediate target appears to be around $48.
Adding to the optimism is the setup based on a post-earnings trade. Doximity recently saw a powerful gap up, followed by flagging—a pattern that often precedes a breakout. Yesterday, the stock showed signs of a breakout from this flag structure, providing a straightforward setup for traders. With a relatively tight stop around $40 or $39.9, there’s a decent reward-to-risk ratio as the stock aims for its first target of $48.For those looking for the setup details, watch the video below for a complete trading plan for Doximity (DOCS):Video Length: 00:01:53More By This Author:Unity Software (U) Stock: The Big Turnaround Or Just A Quick Swing Trade?
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