ZEN still stuck within tight trading range
Zendesk Inc. (ZEN) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
ZEN finished Wednesday at 96.52 losing $1.40 (-1.43%), underperforming the S&P 500 (-0.46%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (ZEN as at Sep 16, 2020):
Wednesday's trading range has been $3.01 (3.06%), that's slightly below the last trading month's daily average range of $3.49. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for ZEN. Prices continued to consolidate within a tight trading range between 93.18 and 99.20 where it has been caught now for the whole last trading week.
Even with a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on July 10th, ZEN lost -5.20% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical resistance level at 98.78 (R1). After having been unable to move above 99.20 in the prior session, the stock ran into sellers again around the same price level today, failing to move higher than 98.67.
Though the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might accelerate should prices move above the close-by swing high at 99.20 where further buy stops could get triggered. Selling might speed up should prices move below the nearby swing low at 93.18 where further sell stops could get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Zendesk. Out of 57 times, ZEN closed higher 56.14% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 64.91% with an average market move of 1.99%.