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  1. Home
  2. / Investing

The Technical Picture Is Changing for Zoom

A month after our last update on Zoom Communications, we're checking the charts and indicators again for a new strategy.
By BRUCE KAMICH
Oct 08, 2020 | 11:56 AM EDT
Stocks quotes in this article: ZM

Zoom (ZM)  has quickly become a new noun and verb in American conversation. Our stay-at-home economy and education system could not operate without it.

We reviewed the charts on Sept. 9 of Zoom Communications Inc. and wrote that "ZM looks like it will resume its impressive rally. Aggressive traders could buy available weakness risking a close below $300." Prices rallied to new highs after our review but a fresh look at the charts is a good idea at this juncture.

In this updated daily Japanese candlestick chart of ZM, below, we can see some new clues. Upper shadows above $510 tell us that traders are rejecting those highs. In recent days the candle patterns are small spinning tops, which suggests a balance between bulls and bears.

A close below $460 could tip the scales to the bear side. The On-Balance-Volume (OBV) line shows a peak in late September and a slight decline -- this could be some subtle selling. The 12-day price momentum study shows weaker momentum readings from September into October.


In this weekly Japanese candlestick chart of ZM, below, we can see two red candles, which could be 2/3 of a "three black crow" pattern. This could mark a top reversal. The weekly OBV line shows a recent dip and the 12-week price momentum study has leveled off.

In this daily Point and Figure chart, below, we can see that a trade at $460 could weaken this chart. 

 
Bottom line strategy: Traders and investors should consider raising stop protection from a close below $300 to a close below $460 now.
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TAGS: Investing | Technical Analysis | Technology | Telecommunications

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