Cisco Systems, Inc. (NASDAQ:CSCO) are suffering in the markets this week and yesterday was the third consecutive session of loss. It ended the day with only 1.35% loss but only after an intraday recovery of about 2%. The volume at 57 million was not only considerably higher than the average volume of 29 million; it was the highest in the last 3-4 weeks too. The high volume coupled with the candlestick formation of a Bullish hammer in price can encourage the short term bulls for a possible bounce to $28.50-$29.00 levels in the next few sessions but it must be kept in mind that the larger trend is down.

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The euphoria over the last quarterly result of Cisco Systems, Inc. (NASDAQ:CSCO) reported last month, was short-lived. The revenue of $11.9 billion was slightly higher than the market expectation of $11.8 billion and 7% higher than the same quarter last year. The EPS, excluding one-time items, came in $0.53, beating the expected figure of $0.51. A quarterly dividend increase was announced too, in the tune of $0.02 per share or a 10.5% increase, which took the dividend to $0.21 from the earlier $0.19.

Technically, the short term trend is down and threatening to turn the medium term trend too. The 5-year chart shows a huge Cup & Handle pattern with very bullish implications in the long term. The breakout above the neckline, shown on the chart, achieved the minimum target. The measuring implication of the pattern gives us much bigger targets of $32 and $38.

The ongoing correction can be a normal reaction to retest the trendline and that will keep the bullishness fully intact but the area around $26 must provide strong and immediate support. The long term investors can accumulate some in the area of $25-$26.