After rallying for most June, Cisco shares have pulled back to an area of interest and support zone for a potential long opportunity. Price is currently testing the floor at the 50 simple moving average, which has acted as a dynamic inflection point for prices.
At the same time, MACD is almost in the oversold area, which suggests that buyers could push Cisco shares back up. Prices are currently around the $25.20/share level, which coincides with a former resistance area.
RSI is reflecting a potential pickup in long-term buying momentum for Cisco shares, as the indicator is moving back above the 50.0 level. Gains for the stock could last until the previous highs at $26.00/share.
Cisco Shares Outlook
Earnings for the company have beat expectations, as it edged up to $2.25 billion, or 43 cents a share, from $2.27 billion, or 42 cents a share, a year ago. Revenue slipped to $12.36 billion from $12.4 billion, which was probably why Cisco shares still slumped after the release of the report.
Bear in mind that the company also announced its plans to cut around 6,000 jobs for the coming months. That amounts to 8% of its work force, as the company could be cutting costs in order to sustain profitability.
A break below the current levels could lead to a test of the next support area at the $23.00/share level, below the recent gap. A sharper selloff could lead to a drop to $22.00/share level for Cisco shares near the 200 simple moving average. Further selling below this level could signal the start of prolonged selloff for Cisco shares.
“We are executing well in a tough environment,” said Cisco chief executive John Chambers in a statement. The company is currently focusing on security, data center, software, and cloud applications. “We’re far from finished,” Mr. Chambers said.
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