Roku Stock Is at an 'Interesting' Juncture

There are certain price levels traders should be aware of.

Shares of Roku Inc. (ROKU) are soft this Friday morning. Roku, if you did not know, is the company whose devices are small streaming boxes or streaming sticks that connect to your television. Their sticks put streaming content from a number of sources on your TV. People can't seem to live without it.

Let's check on ROKU's charts and technical indicators.

In the daily bar chart of ROKU, below, we see an interesting picture. I use the word "interesting" in that this picture could be spun in either direction.

One might easily see a large double-top pattern with peaks in February and July and a neckline around $275 that when broken could precipitate a deeper decline. One might also see the price action of the past 12 months as a large sideways consolidation pattern between $300 and $500. If this is indeed a large consolidation pattern and it breaks out on the upside the price target would be $700 or higher -- the height of the pattern added to the breakout point. Like I said - interesting.

The shares have found buying interest or support around $300 three times (March, May) and we could see this area tested again in the days ahead. The slope of the 50-day moving average line is negative.

The On-Balance-Volume (OBV) line is pointed down telling us that sellers of ROKU are more aggressive with heavier volume being traded on days when the stock has closed lower. The Moving Average Convergence Divergence (MACD) oscillator is at a point where it could cross above the zero line or turn lower.

 

In the weekly Japanese candlestick chart of ROKU, below, we can see a better view of the potential large double-top pattern. The latest candle pattern shows a large upper shadow telling us that traders rejected the rally. Prices are trading below the bearish 40-week moving average line.

 

The weekly OBV line has been in a slow decline from February. The MACD oscillator is bearish.

 

 

In this daily Point and Figure chart of ROKU, below, we can see a potential upside price target of $458 but that may be negated if the column of "O's" continues.

 

 

In this weekly close-only Point and Figure chart of ROKU, below, we can see a downside price target in the $157 area. This would be the double-top story playing out.

 

 

Bottom-line strategy: Chart patterns are fun or at least I think so. Heck, I even wrote a book about them. They are subjective and difficult to "test" like many things in technical analysis, but they do give you levels to be aware of. A break of $275 is the level to watch on ROKU.

 

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