Earnings Play: Zoom Video Communications

Upside breakout from a descending broadening wedge pattern.

Charts (2)

On Monday, after market, Zoom Video Communications (ZM) is expected to report third quarter EPS of $0.75 compared to $0.09 last year on revenue of approximately $693.4 million vs. $166.6 million in the previous year. The Co is the leader in modern enterprise video communications and its expected move based on front-month options is 14.9%. The last time the company reported earnings the stock surged 40.8%.

Technically speaking, on a daily chart, Zoom Video's stock price broke out to the upside of a descending broadening wedge pattern on Wednesday, November 25th. The RSI has also broken out to the upside of a bearish trendline. The simple moving averages (SMA) are arranged in a mixed to bullish manner, as the 50-day SMA is above the 20-day SMA and the 20-day SMA is above the 200-day SMA. Price will likely advance towards the first resistance level of 505.00. If price can get above 505.00, then its next target would be the record high of roughly 589.00. If price surpasses 589.00, then its first Fibonacci target is 732.00. On the other hand, if price falls below the upper trendline of the descending broadening wedge pattern, it would be a bearish signal. If that occurs then traders should look to 366.00 for a potential bounce. If price fails to rebound off of 366.00, then price could tumble back to 281.00.     

Source: GAIN Capital, TradingView

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