Cybersecurity firm Zscaler ( ZS) is moving up the heels of better-than-anticipated earnings and revenue figures and lifting their guidance for analysts and investors. After a steep price decline for the stock since November this fundamental news is welcomed but the question remains whether the charts have improved too.
In the daily bar chart of ZS, below, we can see that the shares stabilized in the $140-$120 area before gapping higher and rallying Friday. The lagging moving averages -- 50-day and 200-day -- still have negative slopes but that is to be expected.
The trading volume shows an increase in May as interest in the stock increased. The On-Balance-Volume (OBV) line was incredibly stable since November even as the shares lost two-thirds of their value and showed improvement in May.
The Moving Average Convergence Divergence (MACD) oscillator has just crossed to the upside for a cover shorts buy signal.
In the weekly Japanese candlestick chart of ZS, below, we can see some bullish clues. First, there are lower shadows on the three most recent candles around $125. Traders were rejecting the lows and that can foreshadow a rally.
The weekly OBV line shows a decline with a slight improvement in the middle of May. The MACD oscillator is bearish but just started to narrow.
In this daily Point and Figure chart of ZS, below, we can see an upside price target in the $233 area.
In this weekly Point and Figure chart of ZS, below, we can see a downside price target in the $107 area.
Bottom-line strategy: Aggressive traders could probe the long side of ZS at current levels or on a dip towards $150, if available. Risk to $138. On the upside we see a rebound to the $200-$233 area in the next few weeks ahead.
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The best quality you can have right now as a trader is patience.
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