The American multinational computer technology corporation headquartered in Redwood Shores, California, Oracle Corporation (NYSE: ORCL) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, Oracle had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – ORCL
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: The stock is currently trading above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70, while Aroon Down (blue line) is below 30. This indicates possible bullishness.
#5 IH&S Pattern: The stock was forming an Inverted Head and Shoulders (IH&S) pattern.
This pattern is marked in orange color in the daily chart.
The stock has currently broken out of the IH&S pattern.
This is a good support level and seems like a good area for the stock to bounce upwards.
#6 Strong Support: The weekly chart shows that there is a strong support level nearby for the stock. This is marked as a green dotted line. The stock had taken support at this area multiple times before breaking out from it with high volume last day. This is a possible bullish sign.
Weekly Chart – ORCL
#7 Bullish RSI: As you can see from the weekly chart, RSI is currently above 50 and moving up, indicating bullishness. The stock is also trading above its 50-week and 200-week SMA, indicating a bullish bias.
#8 Double Bottom Breakout: The weekly chart shows that the stock had broken out of a double bottom pattern recently. This is also a bullish sign.
#9 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of Oracle at the current price of $56.99. The rest of the shares can be purchased if the stock corrects to the breakout level of the symmetrical triangle pattern at around $53.
TP: Our target prices are $62 and $70 in the next 4-6 months.
SL: To limit risk, place a stop loss at $49.50 (for entry near $53) and $53.90 (for entry near $56.99). Note that this stop loss is on a closing basis.
Our target potential upside is almost 8% to 32% in the next 4-6 months.
- Entry at $53: For a risk of $3.50, our target rewards are $9.00 and $17.00. This is an almost 1:3 and 1:5 risk-reward trade.
- Entry at $56.99: For a risk of $3.09, our target rewards are $5.01 and $13.01. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical triangle pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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