Zoom Video Communications (ZM) has become a household name as millions now use it for work, school, and a seemingly endless list of activities. The company is due to report earnings after the close of trading on Monday. Let's check out the charts and indicators.
In this daily Japanese candlestick chart of ZM, below, we can see that prices have just about tripled in just six months. Amazing, and lots of built up profits. Notice the recent candles have been dojis or small spinning tops. Whatever you decide to label these recent patterns they mark a balance between bulls and bears, in my opinion. This can be a reversal for ZM if we get a bearish pattern on Monday or Tuesday.
Prices are above the rising 50-day moving average line but certainly extended above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been flat for about two months even as prices have made new highs. This is a bearish divergence and a heads up that a reversal could happen.
The 12-day price momentum study in the lower panel of the chart shows a bearish divergence from June to August - lower momentum peaks versus higher price peaks.
In this weekly candlestick chart of ZM, below, we can see that this week's candle pattern could be a doji and mark a reversal. The weekly OBV line looks like it is peaking and the 12-week momentum bars are slowing. Seems ripe for a correction.
In this Point and Figure chart of ZM, below, we can see a potential upside price target in the $415 area but also that a decline to $272 could weaken the picture.
Bottom line strategy: I have no special knowledge about the upcoming earnings figures for ZM, but the charts suggest that longs should exercise a fair degree of caution and book profits.
