Oracle Corporation's (NYSE:ORCL) recent downward move may be just a corrective move, after successive bullish moves since late December 2018 until it reached its peak ($60.50) on the week of July 8, 2019 with declining momentum as depicted by the ADX indicator of below 25.
Whenever an ADX reading is below 25, it's better to use Oscillators as a guide on the likely price action to come. We need to watch closely the OB (Over Bought) signal triggered by the RSI and/or Stochastics indicator. Price will likely make a correction or head south whenever RSI and/or the Stochastics indicator hit the OB level, and lean under this OB level. From the weekly chart of ORCL, we can also observe MACD just started to cross-over downward with its histogram moving below the zero line, which further indicates the price action making a corrective move. It should be noted that MACD is a lagging indicator and the signal given is usually not as fast as the RSI or the Stochastic.
The current price action as of the end of this week would potentially lead to a bounce, as it just touched the Fibo 38.2% level at $53.63. This is may be supported by the recent recovery of the Dow and the S&P 500. Using the Ichimoku cloud analysis, the overall price action of ORCL may suggest the corrective move, as the price still sits above the cloud and the future cloud still being bullish.
As a sample trading strategy, buy above $54.75 (the high of the candle on Aug 8) with a stop just below $52.97 (the low of the candle on Aug 7) risking $1.78. Place a long target with at least reward risk ratio of 2:1 at $58.31.
