Shares of Zscaler (ZS) took a sharp dive in extended trading on Tuesday following the release of the company’s earnings guidance for the current quarter and full year. The guidance fell significantly below Wall Street expectations, reflecting cautious spending by enterprise customers amidst economic uncertainty. In this article, we will analyze the Zscaler chart using technical analysis to identify key price levels that investors should monitor amid the projected drop in the stock.
Resistance at the 200-Day Moving Average
Since the 50-day moving average (MA) crossed below the 200-day MA in May, Zscaler shares have been trading sideways. Two rallies in July and August towards the 200-day MA have been met with significant resistance, indicating underlying selling pressure in the stock. On Tuesday, the stock fell 15.1% to $164.10 in after-hours trading, following a 3.4% decline during regular trading amidst a broader market selloff.
Key Levels to Watch Amid Post-Earnings Selling
As the stock experiences weakness, investors should pay attention to three important chart levels where Zscaler shares may attract buying interest. The first level to watch is $164, where the shares are likely to find support near a trendline that connects three prominent swing highs from June to September last year, as well as trading activity around this year’s May and August troughs.
If selling pressure continues, the shares may fall to the $143 level, where investors may seek entry points near the February 2023 peak and a range of comparable price action from June to August last year. A steeper downturn could lead to the shares revisiting lower support around $135. This area on the chart is marked by a horizontal line that connects a range of similar trading levels between October 2022 and August last year. Interestingly, this level also aligns with a price target derived from the stock’s prior sharp decline from February to April, suggesting a potential buying opportunity.
Conclusion
Zscaler’s disappointing earnings guidance has triggered a significant drop in the stock’s value. Technical analysis of the Zscaler chart indicates that the 200-day moving average has been providing resistance, and investors should monitor key price levels at $164, $143, and $135 as potential areas of support. These levels represent important milestones where the stock may attract buying interest. However, it is important for investors to conduct their own due diligence and consider other factors before making any investment decisions.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The author does not own any of the securities mentioned. Readers are advised to conduct their own research and consult with a qualified financial advisor before making any investment decisions.
As of the date this article was written, the author does not own any of the above securities.
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