The shares of Roku (ROKU) were downgraded Tuesday by TheStreet's quantitative service. Let's review the charts and indicators in light of this additional piece of investment information.
In this daily bar chart of ROKU, below, we can see prices have declined from $400 back in late July to approaching $60 in June. Prices have failed at the declining 50-day moving average line several times in the past year. Trading volume does not show us a pattern of increased activity suggesting that prices have not reached a zone that can attract investors with vision.
The On-Balance-Volume (OBV) line has been in a longer downtrend, but has turned sideways in recent months. The 12-day price momentum study shows higher lows from August as prices made lower lows. This is a large bullish divergence, but it has failed to generate an upside reversal.
In this weekly Japanese candlestick chart of ROKU, below, we went back four years to show the large double-top formation in 2021. The height of this major top pattern "measures" to a downside price target around $90 but that does not mean that prices will hold there. The slope of the 40-week moving average line is negative. The weekly OBV line has a downward slope, which is hard to see on this scale. The 12-week price momentum has been slowing but traders are not impressed.
In this daily Point and Figure chart of ROKU, below, we can see a potential downside price target in the $41 area.
Bottom line strategy: In our
May 27 review of ROKU, we favored the long side with a stop below $74. We take our lumps today and now suggest avoiding the long side.
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