Roku (ROKU) is trading lower Wednesday probably on the heels of weakness in Netflix (NFLX) . This may be an opportunity to go long so let's check out the charts and indicators.
In our review of ROKU on March 25 we wrote that traders should, "Continue to avoid the long side of ROKU. Let it fall and don't be too impressed with oversold bounces."
What's changed?
In the daily Japanese candlestick chart of ROKU, below, we can see that the shares bounced from the end of March to the middle of April. Prices have pulled back to correct 50% of this recovery and this is a good place to see if traders find ROKU attractive now.
The slope of the 50-day moving average line is still negative. The slope of the 200-day line is still positive and intersects around $276.
The On-Balance-Volume (OBV) line shows some modest improvement from late March. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero line for an outright go long signal.
In the weekly Japanese candlestick chart of ROKU, below, we see that things are showing improvement. Prices have corrected lower toward the rising 40-week moving average line. Prices did not reach the line and bounced to the upside suggesting that buyers were more anxious to enter.
The OBV line shows only a slight decline the past three months suggesting that prices fell more of their own weight than aggressive selling. The weekly MACD oscillator is pointed down but has been narrowing in recent weeks telling me that the decline is losing strength.
In this daily Point and Figure chart of ROKU, below, we can see that the chart shows a potential downside price target of $267 but we need to see a trade at $321.51 to refresh the downtrend.
In this weekly Point and Figure chart of ROKU, below, we can see a potential upside price target in the $603 area. Impressive.
Bottom-line strategy: Aggressive traders could go long ROKU at current levels risking to $312 for now. Start small and add on strength above $360.
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