Oracle’s new Products say Buy, Descending Triangle says Sell (ORCL)

According to Reuters, Oracle plans new cloud-based products which will be announced in an event on June 6 by Larry Ellison himself via Twitter. Oracle’s stock has been trending upwards since 2002 albeit slowly. ORCL shares price quadrupled in… ten years, gaining 25$ from 10-year low of $8.00. Oracle’s news and long-term uptrend favor buy orders but a threatening descending triangle in the weekly ORCL stock chart says “sell”! The base of the descending triangle is also the latest resistance level that is now acting as support for ORCL stock. Continuous lower lows though imply an imminent breakout; an event that will also mean the end of the uptrend most likely according to technical analysis. Until new highs get printed on the charts, I am not interested in buying Oracle stock.

Oracle weekly stock chart - Descending triangle

Oracle stock price bounced off the 200-day moving average 4 times in the last four months, also indicating a short-term downtrend to say the least. The long red candlesticks in the weekly stock graph indicate increased selling power and buyers weren’t able to stand their grounds. Notice the increased volume during those weeks as well. Those traders/investors either close their long positions taking their profits, or short-sell Oracle stock to buy cover later. Unfortunately I haven’t been one of them!

Sometimes support level acts as an entry point in [intlink id=”13″ type=”category”]stock trading[/intlink]. However the base of a descending triangle isn’t exactly the best support level traders can find. Instead they should be looking to short sell when the support level of a descending triangle is broken and prices drop suddenly as technical analysis say. Most probably that will be the case for Oracle and shares should fall to the next important level, found at $21 or so.

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