Cisco Systems (NASDAQ 🙂 is scheduled to release the market today after market closure. The forecast requires earnings per share of $ 0.81 and revenue of $ 13.07 billion – slightly lower than earnings per share of $ 0.83 and $ 13.43 billion in the previous quarter, but higher than in the same quarter last year ($ 0.75) and equal to sales.
In the last 25 quarters, the company once missed profits – in August 2013 – and three times sales. So, will the company maintain its record of strong revenue today? We bet against it. The balance between supply and demand suggests price weakness. Informed money might try to tell us something through the distribution of company shares.
The share fell more than 8% on August 15 after the company revealed that its Chinese operations had fallen by 25%, creating an enormous falling escape gap that surpassed the share. Since then, the price has withdrawn, resisted through the gap and has fallen by more than 9%, while the downward trend since the peak of July is again low.
The share recovered from October 10 low by 7.4%, more than 4% below the resistance above the gap and more than 2% from the highest point in September, driven by the demand that tried to supply that line. to challenge.
As things stand now, the pattern that has emerged since the separated gap in mid-August is a continuation of the V&G pattern since August. A breakthrough below the $ 45 level of the neck would mean an interruption under the long-term uptrend line since 2016 and a re-test of $ 40 support since March 2018. And if that level breaks, it will be a huge H&S top, what a review of the lows of 2016, in the area of ​​$ 20
The volume is drying up, as well as both the V&G continuity pattern in the short term and the V&G top in the long term. The 50 DMA crossed below 200 DMA, causing the much-feared death cross, and the 100 DMA crossed below 200 DMA in the middle of the current rebound – none of them are encouraging signs.
In summary; the prize is currently developing a continuity pattern since August, which, if completed, would suggest that it could fall under the long-term uptrend line and focus on $ 40 support. If this support is broken, it means a loss of almost 50%.
Trading Strategies
Conservative traders would wait for the completion of the massive H&S summit since March 2018.
Moderate traders risk a short risk once the current, smaller S&G has been completed.
Aggressive traders can now go short, provided they understand the risk and can resist it.
Trade sample
Admission: $ 49
Stop loss: $ 51
Risk: $ 2
Target: $ 43
Reward: $ 6
Risk: reward ratio: 1: 3
