We looked at the charts of Zoom Video Communications (ZM) on August 28 ahead of their earnings report. The company reported quarterly results that quadrupled revenue on the year and posted a ten-fold increase in profits. The shares surged to a new high but weakness in the broader market has trimmed those gains.
Let's check out a few charts on mute and see what strategy seems best.
In the daily Japanese candlestick chart of ZM, below, we can see an unorthodox falling three methods pattern. The pattern normally has a long bullish candle followed by three red or bearish spinning tops before another large bullish candle. This pattern has a big window (or gap) followed by three bearish candles and then a doji.
The shares are up Wednesday but certainly not a big bullish candle, although it is going in the right direction. A falling three methods pattern is a bullish continuation pattern.