When we last reviewed Zscaler (ZS) back on Dec. 3, we wrote that, "The height of the consolidation pattern on ZS is $40 and when added to $160 gives us a $200 price target. Double it and you get $240 as a second target." The shares reached our $200 target but stalled out in the $224-$228 area in February.
ZS has declined significantly in the past five weeks. I hope that traders used the strength to $200 and above to nail down some profits.
Let's see how things look now.
In the daily bar chart of ZS, below, we can see how the picture has changed in a few weeks. Prices fell below the 50-day moving average line and its slope is now negative. The slower-to-react 200-day moving average line was tested last week and could be tested further in the days ahead.
The On-Balance-Volume (OBV) line shows weakness the past month telling me that traders have been more aggressive sellers. The 12-day price momentum study shows a lower high from early March to late March. When compared to the price action which makes a lower low in late March we have a small bullish divergence. This represents a slowing in the decline in March and could be from scale-down buying by forward-looking investors.