Zillow Stock Gaps Down To Possible Support Level: Could It Bounce Back?

Zillow Group Inc. Z shares traded lower Wednesday after the company reported third-quarter earnings results and said it will wind down its Zillow Offers service.

"We've determined the unpredictability in forecasting home prices far exceeds what we anticipated,” said CEO Rich Barton.

Zillow closed down 22.5% at $65.86.

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Zillow Daily Chart Analysis

• The stock saw a large gap downward and now sits near a possible support level in what technical traders call a sideways channel.
• The $65 price level was once somewhere the stock had struggled to get above in the past, but after breaking this level was a possible place of support. The $85 level was somewhere that had held as a support level a few times, but now could be an area of resistance for the stock.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock is likely facing a period of bearish sentiment.
• Each of these moving averages may hold as a potential area of resistance in the future.
• The Relative Strength Index (RSI) dropped off Wednesday and now sits at 28 on the indicator. This drop put the stock into the oversold area, where selling pressure heavily outweighs the buying pressure in the stock.

What’s Next For Zillow?

Bullish traders are looking to see the stock bounce off of the $65 level and begin to bounce back higher. Bulls then want to see the stock start to form higher lows and work its way back toward resistance.

Bearish traders are looking to see the stock continue to drop and for the RSI to get really overextended. The RSI may continue to drop as sellers continue to pile into the stock further pushing the stock lower. Bears are in full control of the stock as of Wednesday.