ORCL Oracle Analysis April 2016 (W,M,Q)
Created on Friday, 08 April 2016 01:21
Written by Austin Galt
Oracle Corp (ORCL) is a provider of enterprise software and computer hardware products and services that are designed to work together in the cloud and in the data center. It is listed on the New York Stock Exchange (NYSE) with a market capitalisation of around $165 billion. Price last traded at $39.97.
Let’s take a top down approach beginning with the quarterly chart.
ORCL QUARTERLY CHART
We can see the massive drop off the 2000 high at $46.47 down into the 2002 low at $7.25. Price has slowly and surely risen from that low and in 2014 finally made new all time highs at $46.71.
The 2014 high essentially made a double top with the 2000 high and this has expectedly led to a reaction back down. This has been a significant correction of around 30% which I now believe to be over.
This double top is against the trend in that it has not formed below a previous high. Therefore, it could be expected that price will eventually trade back up and bust to new highs.
The PSAR indicator is bullish and the recent low was just above support denoted by the dots. These dots currently stand at $33.43.
I have drawn a Fibonacci Fan from the 2002 low to first major high. Apart from the 2009 low at support from the 61.8% angle, the majority of the uptrend has traded very bullishly with the 23.6% angle providing support. I suspect one last test of this support angle is ahead of us. Then price should kick on to new highs.
The RSI showed a triple bearish divergence at the 2014 high and this unsurprisingly led to a significant decline.
The MACD indicator is bearish so some caution is required.
ORCL MONTHLY CHART
The Bollinger Bands show price is back above the middle band although I favour price to head back down to the lower band to set up a higher low.
The horizontal line denotes the 2011 high and price has traded slightly below this line as it gives the support level a good test.
The Fibonacci Fan drawn from the 2009 low to 2011 high shows price back up at resistance from the 61.8% angle. Previously this angle provided solid support and should now be solid resistance and I doubt price will be able to overcome it just yet. Instead, I favour a test of the lows and if I am wrong about a higher low then price could keep going down to the next area of support being the 76.4% angle.
I have added Fibonacci retracement levels of the move up from 2009 low to all time high. Price has already clipped the 38.2% angle and the low forming above the 50% level keeps the overall bull trend in a strong position.
The RSI showed a bullish divergence at the recent low and if price were to make new lows now then it is likely that a triple bullish divergence would set up.
The MACD indicator is bullish.
ORCL WEEKLY CHART
I am working from the assumption that the correction is over and a new bull trend is underway. This sees the recent high as a higher high as it is above the previous swing high which is denoted by the horizontal line. Now we just need price to head down and put in a higher low.
One scenario is that I am wrong about the correction being over and a 5 point broadening low is forming with the recent high the point 4 high and price now headed down to the final point 5 low. This is very valid possibility that needs to be considered.
For the moment, I favour a higher low to form and I am looking for a deep retracement down to at least the 76.4% Fibonacci level which stands at $35.22.
The Bollinger Bands show price is now leaving the upper band and I expect price to get back to the lower band.
The RSI made a new high which is generally bullish looking further afield. The recent low set up a bullish divergence while one fina low would likely set up a triple bullish divergence.
The MACD indicator is bullish although the averages diverged quite a bit and now looking to be curling back over.
Summing up, I am looking for a deep correction now to set up a higher low although I haven’t discounted price making one final low. After that, I expect price to move solidly higher.
Disclosure – I have no financial interest in ORCL.