Zimmer Biomet (ZBH) gaped sharply lower the other day turning the charts from neutral to bearish. With a lot of damage on the chart it will take a lot of "repair" to stabilize the picture. Let's see what sort of guidance the indicators can give.
In this one-year daily bar chart of ZBH, below, we can see the consolidation pattern from July into October where prices stayed between $120 and $135. The On-Balance-Volume (OBV) was neutral in this time period and the 50-day moving average maintained a positive slope until the middle of October. Momentum is not diverging from the price action yet.
Turning your eyes back to the beginning of the year you can see that prices bottomed in the $100-$90 area. This area may provide some support but it remains to be seen.
In this three-year weekly chart of ZBH, below, we can see the price gap and the break below the rising 40-week moving average line. The weekly OBV line has turned down and the weekly Moving Average Convergence Divergence (MACD) oscillator gave a liquidate longs sell signal at the beginning of September.
Strategy: ZBH needs to stop falling and eventually make a low and then ideally a higher low from there. A higher low tells you that buyers are willing to pay up to own a stock. Maybe the round number of $100 will be attractive or maybe the $95 level will entice buyers. Meanwhile, keep your powder dry.
