Transocean Ltd. (RIG) was raised to a fundamental "buy" recommendation by Clarksons Platou Securities Wednesday with a very modest price target of $7.50. However, the charts suggest a much bigger move could unfold.
Let's check out the charts.
In the daily bar chart of RIG, below, I can see a number of mixed signals. Share prices made a base pattern in 2022 with an upside move starting in December. RIG rallied above the 50-day and 200-day moving average lines but has since pulled back below the 50-day. Trading volume has been more active since September and shows me increased investor interest in this stock.
The daily On-Balance-Volume (OBV) line has risen from a September nadir and its advance tells us that buyers of RIG are more aggressive than sellers. The trend-following Moving Average Convergence Divergence (MACD) oscillator has recently moved below the zero line for an outright sell signal.
In the weekly Japanese candlestick chart of RIG, below, I see a promising picture. RIG made a large sideways price consolidation pattern between $2.50 and $5.00. Trading volume remained steady during this move while the weekly OBV line showed a slight rise indicating that buyers of RIG were quietly being more aggressive than sellers.
The MACD oscillator is above the zero line but showing some near-term weakness. A recent lower shadow near $5.50 on a candle pattern suggests traders are rejecting the price lows near the top of the consolidation pattern.
In this daily Point and Figure chart of RIG, below, I see that the software is projecting a possible downside price target in the $4.00 area.
In this second Point and Figure chart of RIG, below, I manipulated the data using close-only weekly price points. Here the software suggests the $17 area as a price objective.
Bottom-line strategy: I suspect RIG will trade in a $5.50 to $7.50 range for a while. Patient traders could look to probe the long side of RIG around $5.50. A weekly close above $8.00 could open the way to further gains.
