Shopify Inc. (SHOP) shares soared more than 12% on Tuesday after the company reported better-than-expected second quarter financial results. After trading sideways since mid-May, the stock broke out from an ascending triangle pattern to all-time highs on the news. Traders will be watching to see if the breakout is sustainable as long-term investors digest the second quarter results and reassess the company's valuation.

Second quarter revenue jumped 75% to $151.66 million – easily beating consensus estimates by $8.02 million – while net losses of a penny per share beat consensus by six cents per share. On the financial results conference call, CFO Russ Jones indicated that a record number of merchants joined the platform during the second quarter, and the company's cash position expanded dramatically to $932.4 million compared with just under $500 million in March. (See also: Shopify Launches Ecommerce Channel for Gaming Companies, Integrates With Apple.)

Technical chart showing the performance of Shopify Inc. (SHOP) stock

From a technical standpoint, the stock broke out from an ascending triangle pattern to all-time highs on higher than average volume. The relative strength index (RSI) spiked near overbought levels at 67.23, but the moving average convergence divergence (MACD) experienced a bullish crossover that could signal the start of a new rally. However, Tuesday's doji candlestick points to possible indecision in the marketplace.

Traders should watch for a significant move above R2 resistance at $103.32 and for the price to remain above trendline and R1 support at $97.85. If the stock breaks down from these levels, traders could see the price retest lower trendline support levels at around $90.00. Traders should maintain a bullish bias on the stock given the strong move higher on Tuesday, but the doji candlestick does warrant some caution before entering large long positions. (For more, see: Shopify Abruptly Falls to Key Support Levels.)

Chart courtesy of The author holds no position in the stock(s) mentioned except through passively managed index funds.