|On the weekly chart, OIH formed a rising wedge and broke trendline support in late July. The rising wedge retraced 62% of the prior decline. Both the retracement and pattern are typical for corrective rallies or advances within a larger downtrend.|
|There was a small bounce after the initial trendline break, but this fizzled at 61 and the stock declined back to its prior low around 55. With the second decline (61 to 53.77), the trendline break is solidified and the projections are for a continuation of the prior decline (75.89 to 44.7). As a continuation of the larger downtrend, the target would be below the Jul-02 low at 44.7.|
|Figure 1: Weekly chart for OIH.|
|Graphic provided by: MetaStock.|
|The daily chart also sports a bearish trendline break. After the decline from 67.5 to 53.97, the stock retraced just over 50% with an advance to 61. OIH went on to form a symmetrical triangle over the next few months (magenta trendlines) and broke trendline support in late October. This signals a continuation of the prior decline and projects further weakness below 50. The target is found by measuring the widest point of the symmetrical triangle (~7 points) and subtracting it from the break point (~57).|
Figure 2: Daily chart for OIH.
With a move from 60.4 to 53.77 in the last 4-5 weeks, OIH became a bit oversold. Notice that the Stochastic Oscillator dipped below 20 (oversold) and is currently rising. As long as the indicator rises, it would be wise to respect the bulls. I would expect some resistance around 50 and another downturn in the indicator could foreshadow a move below 50 in the stock.
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