Zoom Video Communications (ZM) will report its latest quarterly numbers after trading ends on Monday. The stock of the company that everyone knew about during the epidemic was slammed last year but some technical indicators that I am observing are showing some improvement and some bullish deviations could eventually create a bounce in the opposite direction. Let’s check.
Below ZM’s daily bar chart, we see a long and painful slide from around $ 400 in July to less than $ 100 this month. Bearish is trading below the 200-day moving average line, as well as the bearish 50-day moving average line. With a share transaction at half the price of a 200-day line intersection, I would consider the price increased or oversold.
Trading volume has increased since March and the on-balance-volume (OBV) line has declined since July but slowed down as the May low was slightly lower than the March low.
The 12-day price momentum study on the bottom panel of this chart shows that momentum levels have improved since December and prices have continued to decline. This difference in price and what the index is doing is a bullish divergence and can sometimes predict a rally. This evening could be time with earning out.
Below, on ZM’s weekly Japanese candlestick chart, we see a potential bullish hammer bottom pattern in the second week of May. The latest candlestick pattern is a spinning top so this week we’ll look at some bullish confirmations below. A white real body will do it this week.
The weekly OBV line is still pointed down but like the daily momentum study, the weekly momentum study shows a slowdown of ups and downs.
In this daily point and figure chart of ZM, below, we can see the potential negative price target of $ 49 but trading at $ 96.45 or more will improve this picture.
In this weekly point and figure chart of ZM, below, we have used a five-box reversal filter. Here the software tells us that the price has reached and exceeded the target of $ 161
Bottom line strategy: I have no specific knowledge of how ZM will report to shareholders and analysts, but the price has both been raised negatively with the Momentum Indicator vs. five month bullish divergence. Aggressive traders can investigate the long side of ZM before making a profit. This is only a bounce trade because ZM has not formed a new base pattern. Use a reasonable sell stop like $ 75 and look for rebounds in the $ 125- $ 150 area.
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