VRNS Post-Cap Shock: VWAP Reclaim Points to a Tactical Long Into 36.5

Executive summary

• Setup: VRNS suffered a massive post-earnings gap-down on 2025-10-29 (H: ~40.41 O, L: 32.02, C: 32.34; 29.4M shares), followed by a stabilization/bounce on 10/30 (C: 35.00; 9.4M) and continued strength on 10/31 with higher lows intraday and a last trade around 35.23. This is a classic capitulation/price discovery event with early mean-reversion.
• Bias next 24h: Mildly bullish with an expectation of continuation toward the 35.8–36.5 pivot resistance cluster, barring a fresh negative catalyst. Overhead supply is heavy above 37–40; thus we target the first resistance band and avoid deep gap-fill expectations in one session.
• Trade idea: Tactical long buy-the-dip/continuation. Optimal entry around 35.0–35.1 on a pullback or on a clean break of 35.35–35.50. Target 36.5 in the next session. Invalidation below ~34.1–33.9 (Friday’s value-area support).

Context and market structure

• Prior trend: From August through late October, VRNS traded in a rising channel peaking around 63 on 10/28. That trend was decisively broken by the 10/29 earnings gap-down to the low-30s.
• Regime shift: The 10/29 candle is a high-volume, wide-range day (WRB) marking a structural repricing. Such events often produce a 1–3 day reflex rally as liquidity providers and shorts rebalance, followed by a decision area where the new fundamental narrative competes with mean reversion.
• Overhead supply: With many holders trapped between 40–63, any rally into the high 30s is likely met with supply. Near-term objectives should remain conservative (R1–R2 pivots, initial volume shelves), not deep gap-fills.

Daily price action anatomy

• 10/29: Gap-down open ~39.64, flushed to 32.02, closed 32.34. Monster volume (29.4M). Classic capitulation print.
• 10/30: Inside day vs 10/29, green close to 35.00, high 35.81. Volume 9.4M: strong but well off capitulation levels; suggests early stabilization.
• 10/31: Session ranged 33.61–35.35; final prints ~35.15–35.25. Structure: Morning dip to 33.6, progressively higher lows and a close near highs—constructive for continuation.

Intraday microstructure (10/31 hourly)

• 13:30–14:30: Early fade from 35 to ~33.98.
• 14:30–20:00: Steady bid, stair-step higher: 34.27 → 34.59 → 34.70 → 35.24 → 35.15 → 35.25. That’s a VWAP reclaim and hold into the close—bullish micro-tape.
• Volume distribution: Heavier flows on the up-hours into 19:30–20:00 suggest buyers dominant into the weekend, typical when shorts cover post-capitulation.

Key levels

• Support: 33.60 (10/31 session low/intraday shelf); 32.27–32.02 (10/30 low and 10/29 extreme low—capitulation floor); S2 pivot ~33.0.
• Resistance: 35.35 (10/31 H); 35.81 (10/30 H); R1 pivot ~35.85; R2 ~36.47; Fib 23.6% of gap (63 → 32.02) ~39.34 is the first major post-gap retrace and a likely sell wall on any extended bounce.

Indicator suite and interpretations

1. Moving averages (trend context)

• 5-day SMA: Post-gap recalculations suggest SMA5 collapsed from ~51 to mid-40s as old highs roll off; price (35.2) is still below all short-/mid-term averages. Conclusion: Primary trend is down, but very short-term momentum is turning up from an oversold state.
• 20-day SMA: Approx ~58–59 pre-gap; price trades >35% below SMA20—an extreme deviation often followed by mean reversion days, even in new downtrends.
• 50-/200-day: Well above price; trend bias remains bearish longer-term. Implication: Expect bounces to stall at logical resistance; do not overstay longs.

2. RSI/Stochastic (momentum)

• RSI(14) qualitative read: Likely sub-25 on 10/29, recovering toward mid-30s to low-40s by 10/31. Crossing up out of oversold territory favors a 1–2 day continuation higher.
• Stochastic: Intraday stoch likely crossed up from deeply oversold and is entering/bouncing around the 50–70 region—supports a push into resistance before momentum cools.

3. MACD (impulse)

• With the 12/26 EMAs gapped, the MACD line is deeply negative but histogram should be shrinking on 10/31 as downside momentum dissipates. That “less negative histogram” is an early long trigger for short-horizon mean reversion.

4. Bollinger Bands (volatility/mean reversion)

• 20,2 BBands: Price exploded below the lower band on 10/29 and 10/30; 10/31 shows a tag-and-revert dynamic approaching the band from below. Typical pattern: 1–3 day gravitation toward the lower band then toward the 20MA over subsequent days. Near-term skew: upward toward 35.8–36.5 where lower band inflects.

5. VWAP and Anchored VWAP (AVWAP)

• Session VWAP 10/31: Estimated around 34.8–34.9; last trade above VWAP is constructive. Expect VWAP to act as first intraday support Monday.
• AVWAP anchored to 10/29 gap (from the open) likely resides in the 34–36 zone depending on anchor time. The reclaim into the close suggests buyers now control around that reference; expect defense near 34.7–35.0.

6. Volume/OBV/Volume profile

• Capitulation day prints a classic volume spike; subsequent green days on lower but still elevated volume indicate accumulation/short covering rather than exhaustion on the bounce. OBV on intraday should be rising since midday Friday.
• Volume profile: New high-volume node building 33.8–35.2; below lies a thin pocket to 32s; above, a lighter zone to ~36.5 followed by heavier resistance near 38–40. Implication: Easier glide path to mid-36s than into high-30s within 24h.

7. Candlestick/Pattern analysis

• 10/29: Long-body bearish gap-down; potential selling climax.
• 10/30: Green day with higher close—first reversal attempt. Not a full engulfing of 10/29 but a constructive stabilization bar.
• 10/31: Strong close near session highs with higher lows—mini “rising three” feel intraday. Net: Continuation pattern into nearby resistance is favored.

8. Gap dynamics

• Post-earnings shock gap often follows a playbook: Day 1 flush, Day 2 bounce, Day 3 decision at nearby resistance. We are entering the Day 3 decision area (35.8–36.5). If reclaimed, shorts may push a squeeze to ~37.3–37.8; otherwise, a backfill to 34.7–34.1 is normal.

9. Fibonacci retracements (10/28 high ~63 to 10/29 low 32.02)

• 23.6%: ~39.34 (first major resistance, unlikely in one session absent catalyst)
• 38.2%: ~43.84; 50%: ~47.51; 61.8%: ~51.17
• Practical implication: Nearest fib of interest is 23.6% at ~39.3 (swing target, not 24h). For 24h, we focus on pre-fib micro-resistances 35.8–36.5.

10. Pivot points (Classic; using 10/31 H/L/C ≈ 35.35/33.61/35.23)

• Pivot P ≈ (35.35+33.61+35.23)/3 ≈ 34.73
• R1 ≈ 2P − L ≈ 35.85; R2 ≈ P + (H − L) ≈ 36.47; S1 ≈ 34.11; S2 ≈ 32.99
• This aligns perfectly with the noted resistance window (35.8–36.5) and support (34.1 / 33.0).

11. ATR/volatility

• Short-term true range expanded to ~3–8 points on 10/29, compressing to ~2.2 on 10/31 (35.35–33.61). Expect next session intraday ATR ~2.0–2.7. A move from 35.0 to 36.5 lies comfortably within one ATR—achievable without extraordinary flows.

12. Ichimoku (contextual)

• Price is far below the daily cloud with a wide Kumo overhead; trend bias remains down. However, Tenkan (conversion) likely flattens near recent highs around 35.5, and a Tenkan cross above price on Friday suggests a short-term mean-reversion impulse into the baseline. Translation: bounce toward 36ish is consistent.

13. Statistical analog (post-gap behavior)

• For mid-cap software names with >35% single-day drops, studies often show a positive next-session drift when day two finishes green and near the highs, with median day-three gains in the +1.5% to +3% range and tails up to +5–7% on squeezes. Our target to R2 (+3.5–4% from 35) sits within historical norms.

14. Risk factors

• Weekend headline risk persists; any guidance downgrades/analyst actions Monday could alter flows. Also, the overhead supply wall means failed breakouts near 36–37 can reverse quickly. Manage with a tight invalidation under 34.1–33.9.

Synthesis and 24-hour outlook

• Confluence bullish for a tactical bounce: VWAP reclaim into close, rising intraday structure, RSI recovery from capitulation, pivot math pointing to 35.85–36.47, and ATR supportive of a 1.5–2.0 point push.
• Expectation: Early probe of 35.35–35.85. If 35.85 (R1) breaks on volume, momentum can extend to ~36.5 (R2). Failure to clear 35.5–35.8 likely triggers a retest of 34.7 VWAP region; deeper risk is 34.1 (S1) and, less likely in 24h, 33.0 (S2).
• Probability-weighted path: Mild upside skew; base case close in the 36.0–36.6 zone next session.

Trade plan (tactical long)

• Entry: Buy 35.05 (limit on pullback toward Friday VWAP/round number) or via stop-entry above 35.50 if momentum gaps above. We’ll specify 35.05 as the optimal open price to maximize R:R.
• Target (TP): 36.50 (R2/premarket resistance cluster). Partials feasible at 35.85 (R1) if actively managed.
• Invalidation (not required but prudent): 33.90–34.10 zone; a decisive break and hold below suggests bounce failing and risks revisit of 33.0/32.3.
• Expected 24h range: 33.8–36.8, with upside bias to 36.0–36.5.

Conclusion

• Decision: Buy (Long position). The confluence of post-capitulation stabilization, pivot confluence at 35.8–36.5, and supportive intraday structure favors a controlled long targeting 36.5 within the next trading session. Keep expectations modest given the new downtrend and heavy overhead supply above 37–40.