Zscaler Jumps 4.17% On Heavy Volume As Technicals Signal Bullish Reversal

Zscaler (ZS) concluded the latest session at $291.11, a notable gain of 4.17% on above-average volume of 2.16 million shares, suggesting renewed bullish conviction after recent consolidation. This surge requires contextual assessment within the broader technical landscape derived from the historical data.
Candlestick Theory
Recent price action reveals key support developing near $277, confirmed by sharp bounces on September 8th and 17th. A significant resistance zone lies between $291-$294, established by repeated failures to hold beyond it in late August and early September. The recent bullish engulfing pattern on September 11th signaled potential reversal intent, further bolstered by the September 18th strong green candle breaking above the short-term downtrend line visible on the September 12th-17th consolidation. The immediate challenge is sustaining closes above the $291-$294 supply zone; failure could trigger profit-taking towards $277 support.
Moving Average Theory
Zscaler exhibits conflicting trend signals across moving averages. Price has recently reclaimed the 50-day and 100-day SMAs (simulated near $283 and $278 respectively), suggesting improving near-to-intermediate-term momentum. However, it remains significantly below the psychologically critical 200-day SMA (estimated ~$260), confirming the primary longer-term trend remains bearish. The attempted bullish crossover ("Golden Cross") between the 50-day and 100-day earlier in August faltered rapidly during the sharp late-August sell-off, indicating persistent vulnerability. Price needs to hold above the converging 50/100-day SMAs to support a sustainable near-term recovery attempt.
MACD & KDJ Indicators
The MACD histogram is showing nascent positive momentum, transitioning into bullish territory above its signal line over the past two sessions following the price advance. The KDJ indicators similarly reflect improving momentum: The %K line has crossed above the %D line near oversold territory (around 20) in the last week, now rising towards 50. These conjunctions suggest waning downward momentum and potential for further short-term upside, although confirmation of a decisive shift requires continued improvement.
Bollinger Bands
Bollinger Bands (20-period) recently underwent significant compression between late August and mid-September, indicating declining volatility and a potential coiling phase. The sharp move up on September 18th saw price break above the upper Bollinger Band, reaching approximately $291.73 versus an upper band estimated near $288. This breakout is a potential volatility expansion signal. However, closes significantly outside the bands often precede mean-reversion pullbacks. Watch for whether price can stabilize above the upper band, or if it retreats back within the bands, potentially towards the now-rising middle band (20-SMA) near $280.
Volume-Price Relationship
The latest session's price surge was accompanied by the highest volume in over two weeks (~2.16 million shares), validating the breakout and suggesting strong buyer conviction. Contrasting volume patterns are evident: Significant distribution occurred on sharp down days like August 7th (3.19M shares, -5.81%) and July 10th (3.56M shares, -6.42%), while the most potent accumulation signatures accompanied major rallies on May 30th (9.95M shares, +9.79%) and June 2nd (5.83M shares, +6.34%). The recent upswing volume is constructive but hasn't yet reached the intensity of prior major breakout days, warranting monitoring for sustained volume expansion on continued advances.
Relative Strength Index (RSI)
The 14-day RSI, calculated by averaging gains and losses over the period, currently stands around 55 – moving out of neutral territory towards the upper end but not yet overbought (>70). The RSI bottomed near 30 in late August/early September, coinciding with the recent low near $267. The current reading suggests room for potential upside before overbought conditions become a primary concern on the daily timeframe. However, longer-term weekly perspectives might show higher resistance levels, and divergence at extremes remains a key caveat.
Fibonacci Retracement
Applying Fibonacci retracement to the dominant downtrend from the June high (~$317) to the August low (~$267) yields critical levels. The 38.2% retracement resides near $285, now acting as support. The 50% retracement near $292 aligns precisely with the latest close and the recent resistance zone. The 61.8% retracement level offers the next significant resistance target near $297-298. Given the confluence of this 50% Fib level and the $291-$294 price resistance zone established earlier, overcoming $292-$294 decisively becomes crucial for extending the rebound towards $297-298. Conversely, failure here could see a retest of the 38.2% ($285) level.
Confluence & Divergence Assessment
Significant confluence exists around the $291-$294 zone: it represents both the 50% Fibonacci retracement level and the established prior resistance ceiling tested multiple times in late August and early September. The breakout attempt on strong volume on September 18th, coupled with improving momentum (MACD, KDJ) and a neutral RSI, offers a technically plausible setup for continuation if this resistance is sustainably breached. However, a divergence to note is that while price is challenging key resistance, the MACD line remains below its highs from the late July peak, indicating momentum hasn't fully confirmed the strength of that prior move yet. Caution is warranted until price confirms a close above $294 and volume persists above average levels. The proximity to the Bollinger Band upper limit also suggests a possible near-term consolidation or pullback to digest recent gains before a sustained move higher materializes.