In mid-November, we predicted a decline in Zoom Video Communications (NASDAQ: ZM) shares. During this time, they had time to fall from $ 403.58 to $ 333.01 (as of January 12). However, today we change our attitude to these securities.
We believe that the shares of the platform of the video conferencing platform from San Jose are preparing to return to an upward trajectory with a prospect of testing a record maximum of $ 588.84 of October 19.
On Friday, ZOOM shares rose after the Consulting company BERNSTEIN called them the best investigator for 2021. According to the report, the 35 percent sales (which began in mid-October) was redundant. BERNSTEIN believes that Zoom shares will take the market, reaching $ 610.
Shares escaped from the borders of the descending wedge, which has a "bullish" character, as follows 150% rally from the minimum of August 11 to a record high of October 19.
Please note that the breakdown occurred during the tapping of the vertex of the wedge of the Long-Term Trend line (originated in January 2020). Also note that as the wedge is being created, the trading volume decreased, demonstrating that the sale contradicted the trend. In this case, the test was accompanied by a sharp splash of the volume indicator, indicating the direction of the pulse.
The 200-period DMA, broke away from the rising trend line, having supported the wedge, while the 50-period sliding on Friday made resistance. The 100-period DMA demonstrates the point of technical pressure located in the middle of the model; In November, she supported prices, whereas since December constrained them (allowing to carry out the basis of the model and confirming its technical significance).
Then 100 DMA came accurately to the previous maximum of December 21 at $ 427.47.
RSI just struck their own resistance, signaling about the price surge. MACD, in turn, has already formed a purchase signal when the short MA crossed a longer sliding (demonstrating the accelerating increase in prices).
Trading strategies for the purchase
Conservative traders should wait for a peak breakdown of December 21 at $ 427.49 and rollback, which tested the integrity of the model and in the future will confirm the sufficient nature of demand for the resumption of the uptrend.
Moderate traders will be happy with a rollback (preferably after closing above 50-period DMA), which minimizes the risks.
Aggressive traders can buy now, provided that they realize and take all the risks associated with the market entry without confirming the direction. The higher the risk, the more disciplined traders must be.
An example of a position
Login: $ 375; Stop Loss: $ 350; Risk: $ 25; Target: $ 575; Profit: $ 200; Risk ratio to profits: 1: 8.
Note Author: We only assume the further direction of price movement based on statistics. Nothing more.
According to Charles Kirkpatrick, the likelihood that the downstream wedge will be atypical is 6%. However, even the right assumption of the direction does not guarantee the profitability of the position. The chances of success depend on the selected temporary range of trading, budget constraints and temperament. Make a plan suitable for you personally. If you do not know how to do it, experiment with small sums.