Unity Software ( U) was downgraded to "neutral" by a sell-side firm Wednesday and the shares are poised to open with a downside price gap keeping the bears in control. The company reported weak quarterly numbers Tuesday evening and gave slowing guidance to investors and analysts.
Let's check closer at the charts and indicators.
In the daily bar chart of U, below, we can see that the shares have been in a downward trend after a spike top pattern in November. U has traded steadily lower into May. Prices trade below the negatively sloped 50-day and 200-day moving average lines.
Trading volume has been heavier since November telling us that more and more traders believe and react to the bearish story for the company. The daily On-Balance-Volume (OBV) line is pointed lower, telling us that sellers of U are more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish. 
In the weekly Japanese candlestick chart of U, below, we can see a bearish picture. Prices have been cut in half and then cut in half again since November. No bottom reversal pattern is showing and no lower shadows. The shares are below the declining 40-week moving average line.
The weekly OBV line is bearish and so is the MACD oscillator.
In this daily Point and Figure chart of U, below, we can see that the shares reached and exceeded a downside price target of $76.
In this weekly Point and Figure chart of U, below, we used a five-box reversal filter. Here the software suggests a price target in the $36 area. This target could be reached or exceeded today.
Bottom-line strategy: Do not fight the tape -- this downtrend is not done yet. Continue to avoid the downside as we recommended in March.
