Bearish Triangle and Death Cross in Zoom Video
As Zoom Video Communications continues to struggle, more bearish patterns have appeared on the chart.
First, the recent price action has resulted in a descending triangle, with support around $309. This is a classic continuation pattern, pointing to potentially more downside in coming weeks.
Second, the 50-day simple moving average (SMA) is about to cross below the 200-day SMA. In other words, a “death cross.”
Third, notice how volume has been lower on the green days. Also notice the large bearish engulfing candle on March 2. That’s especially noteworthy because it followed a strong earnings report. It was the second straight quarter that good news was met with selling – another potentially bearish sign.
Finally, other important numbers remain a problem for ZM. Its price/earnings ratio is a whopping 75x and price/sales is 34x. Meanwhile, Treasury yields keep rising and coronavirus infections have fallen. In other words, ZM was a very effective way to play the pandemic. But as that moment seems to fade, it’s a very expensive stock suited to a very different market.
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First, the recent price action has resulted in a descending triangle, with support around $309. This is a classic continuation pattern, pointing to potentially more downside in coming weeks.
Second, the 50-day simple moving average (SMA) is about to cross below the 200-day SMA. In other words, a “death cross.”
Third, notice how volume has been lower on the green days. Also notice the large bearish engulfing candle on March 2. That’s especially noteworthy because it followed a strong earnings report. It was the second straight quarter that good news was met with selling – another potentially bearish sign.
Finally, other important numbers remain a problem for ZM. Its price/earnings ratio is a whopping 75x and price/sales is 34x. Meanwhile, Treasury yields keep rising and coronavirus infections have fallen. In other words, ZM was a very effective way to play the pandemic. But as that moment seems to fade, it’s a very expensive stock suited to a very different market.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
