Zscaler ( ZS) is a global cloud-based information security company and its charts are at an interesting technical juncture. ZS has declined since late July and now prices are poised to test the rising 200-day moving average line. Will this become a reason to buy or sell? Let's dig further.
In this daily bar chart of ZS, below, we can see the recent correction. Prices are below the declining 50-day moving average line and as we mentioned, testing the 200-day line.
The On-Balance-Volume (OBV) line looks like it peaked in June and its subsequent decline tells us that sellers of ZS have become more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in bearish territory but the two moving averages that make up this indicator have begun to narrow towards a cover shorts signal.
In this weekly bar chart of ZS, below, we can see a mixed picture. Prices are still above the rising 40-week moving average line but a test of the line is coming.
The weekly OBV line has been weak since June and the MACD oscillator crossed to a take profits sell signal last month.
In this weekly Point and Figure chart of ZS, below, we can see that price reached a downside price target. This does not mean that prices have finished declining but it can be a signal for some traders.
Bottom line strategy: ZS has declined and it is close to the 200-day line. The correction could be near its end but I need to see more price action before making a recommendation.
