Diamond Offshore Drilling Inc. (DO) has been trading higher the past 12 months but it is just the second part of a large and bullish base pattern. Let's check out the charts and indicators to see what sort of upside price potential exists.
In this daily bar chart of DO, below, we see the pattern of higher lows and higher highs. Prices recently broke out to a new high above $21 but retreated back in the consolidation pattern and the rising 50-day moving average line. The 200-day moving average line is rising and intersects around $17 now. The daily On-Balance-Volume (OBV) line shows a positive trend the past year and only a very slight dip when prices corrected sharply from January into February. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line and turning up to another go long signal.
In this weekly bar chart of DO, below, we went back four years to show the size of the bottom reversal pattern. Prices are above the rising 40-week moving average line. The weekly OBV line has been rising the past year and the weekly MACD oscillator is bullish.
In this Point and Figure chart of DO, below, we can see a $26.50 price target. A close at $27 or higher will be an important upside breakout and allow for a more bullish price projection.
Bottom line: DO looks very bullish. Traders and investors should continue to position DO from the long side. Risk below $17 and add on strength.