Here's Why Oracle Is a Buy on a Pullback
Oracle (ORCL) - Get Report stretched its rally off the June low to an impressive 10% last week. This powerful surge began after shares built a very solid base near a major support zone.
,With heavy supply near the March peak now in play, Oracle may soon enter a pullback phase.
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Three days after Oracle exploded to the upside back on March 16, the stock reached the $42 area. At this level, the stock was up over 28% from the January low and had entered deeply overbought territory. By early April, a pullback was underway, one that would eventually drop the stock down to major support near the 200-day moving average. The stock held this key level in June, eventually putting in three weekly lows, including the Brexit spike low, near the level. When the panic began to ease on June 28, Oracle quickly launched off the $38 level, leaving behind an important low in its wake.
Now that Oracle has returned to the March highs of $42 upside, momentum appears to be easing. Although shares are not in overbought territory as this area is being tested, a pullback and consolidation is likely. For bullish investors, this will lead to lower entry opportunities in the near term.
Oracle bulls should keep close eye on the $40.50 area. This level marks the May high and should be considered for low-risk entry. If Oracle can base in this area, the powerful bull trend that has been in place since January could quickly reignite.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long ORCL.