Zscaler Is Vulnerable to Further Declines
Traders should avoid the long side of this cybersecurity name.
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Zscaler ZS is known for its Zscaler Internet Access which "inspects all traffic at scale and uses a unique single scan, multi-action mechanism to apply layered, inline, AI-powered security controls and stop threats without disrupting user productivity." Way, way above my pay grade.
Let's check out the charts and indicators of this tech name.
In this daily bar chart of ZS below, I can see that prices reached a high in February and then declined from there. Prices declined into late May and then rebounded for a while and then we got a retest of the May low in early August. Prices are trading below the cresting 50-day moving average line and the cresting 200-day moving average line. The daily trading volume has declined over the past two-and-a-half months. The On-Balance-Volume (OBV) line shows some weakness since early July. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and trying to cross to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of ZS below, I fail to see a robust looking setup. Prices are trading below the cresting 40-week moving average line. I do not see a clear bottom reversal pattern and the OBV line has been weakening since February. The MACD oscillator is below the zero line in sell territory.
In this daily Point and Figure chart of ZS below, I can see that prices reached and exceeded a downside price target in the $165 area.
In this weekly Point and Figure chart of ZS below, I see that the software is projecting a downside price target in the $111 area.
Bottom line strategy: ZS has bounced off the $160 area/zone twice but I tend to doubt that a third downside move will be so lucky. Avoid the long side of ZS.
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