EarningsBeats.com Digest for March 31, 2021
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The Ultimate Gap Support Is Where I Buy
In my EB Daily Market Report on Tuesday afternoon, I highlighted a potential reversal on Zscaler, Inc. (ZS). It had been downtrending for weeks, along with many growth stocks. After touching the 230 level, ZS trended lower until hitting an intraday low of 160.66 on Tuesday, before closing back at 165.79. That was a big kick save. When ZS topped in early September, its high candle body was its September 2nd open of 162.99. After
consolidating for a few months, ZS gapped higher on December 3rd, opening at 163.45 and then ultimately running to that 230 level:
In all my years of technical analysis, I've not found a better price support than a stock that gaps up above prior price resistance on MASSIVE volume and continues pushing higher. When it returns to that initial gap level, it typically holds. Well, we're about to find out, because ZS traded beneath 163.45 intraday on Tuesday, only to close back above it. I would expect ZS to make a run back towards 175-180. If it can break out above that
area, that would be more bullish from an intermediate-term perspective. To the downside, watch for any close beneath 163.45. That would be a short-term red flag.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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