ZS finds buyers at key support level
Zscaler Inc. (ZS) Technical Analysis Report for Mar 25, 2020 | by Techniquant Editorial Team
ZS finished Wednesday at 59.13 losing $3.01 (-4.84%) on high volume, notably underperforming the S&P 500 (1.15%). Trading $4.57 higher after the open, Zscaler was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (ZS as at Mar 25, 2020):
Wednesday's trading range has been $8.49 (13.71%), that's far above the last trading month's daily average range of $4.56. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for ZS.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. The last time this happened on February 20th, ZS lost -16.37% on the following trading day.
After trading down to 58.01 earlier during the day, the stock bounced off the key technical support level at 59.06 (S1). The failure to close below the support might increase that levels significance as support going forward. The share closed back below the 200-day moving average at 59.16. After having been unable to move lower than 58.45 in the previous session, the market found buyers again around the same price level today at 58.01.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 50.04.
ZS shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 200" stand out. Its common bearish interpretation has been confirmed for Zscaler. Out of 2 times, ZS closed lower 100.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 100.00% with an average market move of -14.13%.