Transocean Ltd., (RIG) was cut to an equal-weight rating (hold) by a sell-side firm here on Thursday. Let's review the condition of the charts and indicators of the offshore drilling company to see what may be ahead of its shares.
In this daily bar chart of RIG, below, I can see that share prices moved sideways (basing) from March and then broke out to the upside in late December. Prices are trading strongly above the rising 50-day moving average line and above the rising 200-day moving average line. The trading volume has been more active from September and tells me that investor interest in RIG has increased. The math-driven On-Balance-Volume (OBV) line shows a nice rise from late September as buyers of RIG became more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but has narrowed toward a possible downside crossover and take profit sell signal.
In this weekly Japanese candlestick chart of RIG, below, I went back to 2019 to show the base pattern in full. Prices found buying interest at and below the $3 level and the upside price target for RIG should be a multiple of $3 -- $6, $9, $12 and so forth. The slope of the 40-week moving average line has turned positive. The weekly OBV line has been rising since late 2020 and confirms the rally's strength. The MACD oscillator is bullish.
In this daily Point and Figure chart of RIG, below, I can see an upside price target in the $9 area.
In this weekly Point and Figure chart of RIG, below, I can see a price target in the $15 area. This would be a five-fold move up from the base.
Bottom line strategy: Traders should let RIG trade sideways a bit longer before probing the long side. Risk to $6.40. My upside price targets are $9 and then $15.
