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Chart Of The Day: Zoom Shares Headed Lower On Weakening Demand

By Investing.com (Pinchas Cohen/Investing.com)Stock MarketsAug 30, 2021 09:40
ca.investing.com/analysis/chart-of-the-day-zoom-shares-headed-lower-on-weakening-demand-200486397
Chart Of The Day: Zoom Shares Headed Lower On Weakening Demand
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 30, 2021 09:40
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Zoom Video Communications (NASDAQ:ZM), one of the tech sector's market darlings, whose shares were boosted by the work-from-home environment created by the COVID-19 pandemic, is scheduled to release corporate results today after the market close. Analysts are expecting an EPS of $1.16 on revenue of $991.21 million.

If this pans out, it will be mean the video-first communications platform performed better than it had during the corresponding quarter last year. That's when Zoom became a household name, at the height of the pandemic.

Still, whether today's report will meet—or possibly even beat—expectations, its technical chart is showing the stock is headed lower.

ZM Daily
ZM Daily

The price has been developing a rising flag, bearish after its nearly 18% plunge in just two weeks, before Aug. 15 and Aug. 19.

That plunge formed not only the flagpole, but the right side of a double top. In addition, the recent tumble triggered a Death Cross.

While the 50 DMA shows as support for the low of the double-top, the 100 DMA reveals the pressure point of the rising flag. A downside breakout will verify the double top, as well as complete the flag.

Trading Strategies

Conservative traders should wait for the concise downside breakdown, followed by a corrective rally that tests and confirms the resistance of the flag.

Moderate traders would also wait for the same movement, for the downside penetration and the return move, for a better entry, if not for confirmation.

Aggressive traders could short now, provided they understand the higher risk that goes along with moving before the rest of the market.

Trade Sample

  • Entry: $347
  • Stop-Loss: $350
  • Risk: $3
  • Target: $320
  • Reward: $27
  • Risk:Reward Ratio: 1:9
Chart Of The Day: Zoom Shares Headed Lower On Weakening Demand
 

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Chart Of The Day: Zoom Shares Headed Lower On Weakening Demand

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