It's a good sign that software stocks appear to be holding up well despite elevated interest rates, which is unusual since they are typically long duration plays sensitive to higher rates.

This resilience suggests investors are focusing more on underlying fundamentals and growth potential, rather than simply discounting future cash flows at higher rates. For names like Toast, that shift in sentiment is helping support the constructive technical setup now unfolding on the charts.

With restaurants, the core segment Toast caters to, continuing to perform well, the stock's ability to dig in and push upward underscores the improving technical picture and raises the odds that the current strength can extend into the sessions ahead.

$Aramark(ARMK-W)$ is higher by 64% year to date. Texas Roadhouse just broke above a triple top at the very round $200 number, a level dating back to November 2024. Cheesecake Factory and Brinker International are up 11 of the last 13 weeks.

Let's turn to the daily and monthly charts to examine the technical reasons behind our bullish outlook heading into year-end.

Toast, a software technology company, is higher 10 of the last 13 weeks and over the last three months has gained more than 50%, an impressive feat, thrashing the 10% advance by the iShares Expanded Tech-Software Sector ETF.

Looking at the daily chart, there is plenty to admire. First, the ratio chart shows strong relative performance against software peers, as measured by the IGV, since June. The chart also shows a bullish RSI divergence, with RSI making higher lows in February and May while the stock made a lower low.

Momentum is improving as well, with the 50-day simple moving average approaching a bullish golden cross above the 200-day simple moving average. In late July, the stock decisively broke above the $30 pivot of a bullish inverse head-and-shoulders pattern while simultaneously forming a bull flag. Adding to the bullish picture was an island reversal completed on June 1, accompanied by a 7% gap higher.

Taken together, I see a path to $50 by early 2027, representing a 43% gain from current levels. Remain bullish above $33.

Toast was trading around $35 Wednesday.

Turning to the monthly chart, investors should monitor a potential bullish MACD crossover, which would further confirm improving momentum. The stock is also vying for its first three-month winning streak in more than a year. Encouragingly, the heavy volume seen in February and May failed to produce additional downside.

The candlesticks are also becoming more constructive. Doji candles appeared in March and June, while bullish hammers formed in April and May along the now upward-sloping 50-month simple moving average. Taken together, these signals provide further technical evidence that the stock may have established a durable bottom.

A cup base is now taking shape, with a breakout above the $49.76 trigger potentially signaling the next leg higher. It's worth noting that the stock's first month of trading in September 2021 produced an ominous doji, followed by a bearish engulfing candle in November that preceded the formation of a long cup-with-handle pattern. That setup failed shortly after breaking above the $44.21 pivot in June, forming a bearish harami in August.

Doug Busch is the senior technical analyst at Barron's Investor Circle. His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.