Long-Term Downtrend Shows Signs of Reversal
Shares of Zoom Communications, Inc. (ZM) have been reversing a long-term downtrend since November 2024. The first evidence of a reversal appeared during a rally that month that advanced above the August 2023 swing high of $75.91. Last week a continuation of the bull trend was indicated on a breakout of a long-term consolidation pattern. This suggests that further upside is likely if buyers remain in charge and key support holds at moving averages. Earnings for Q4 are scheduled for February 23.
Breakout From Multi-Month Base Signals Continuation
There was a breakout triggered last week from a 14-month base that can be seen along with the larger trend pattern on the weekly chart. The breakout confirmed on the daily timeframe but not on a weekly closing basis. A sharp bullish impulse leg began the current advance in reaction to a new record low of $55.06 in August 2024. Subsequently, the end of the sharp rise at $92.80 established the top of a large consolidation pattern and therefore the breakout level.
Trendline Reclaim and Fibonacci Support Reinforce Bullish Case
During the impulse leg, the long-term downtrend line was captured, providing another bullish reversal signal. One could argue that the trendline is invalid since it was established several years ago and defined by two relatively close anchor points. However, the pullback after the initial breakout consistently found support near the trendline, showing prior resistance as support. Once a 78.6% Fibonacci retracement completed, a higher swing low was established that ended the pullback.
Multi-Timeframe Moving Average Support Confirms Demand
A bullish trend continuation signal triggered last week out of a rounded base and above support of all moving averages. Since the pullback in October, support has been seen at the 50-period average on the weekly chart and the 20-period on the daily timeframe. This confirms demand across multiple timeframes. On each timeframe, the base breakout was preceded by a bounce from the average.
Daily Close Above Key Resistance Strengthens Upside Outlook
The goal of reviewing prior price behavior is to understand how the market responded near key levels and apply those insights going forward. ZM stock is signaling higher prices. Another daily close above $92.80 would strengthen the bullish continuation case.
