Oracle trying to bounce from a major support

Denver, CO, 07/11/2013 (Avauncer.com) – Oracle Corporation (NASDAQ:ORCL) (Closed: $31.23, Down: 0.53%) is showing the possibility that its correction has ended and It’s ready for its next big rally. Two months back this May, the stock hit a high of $36.43 which was nearly the same as the 2012 top of $36.50. The inability to cross that region dragged the price down and made a structure which was increasingly looking like Double Top. But it has got a bounce after hitting $29.86, which is a very crucial for at least 3 reasons.

First and foremost, $29.86 is very close to the long term channel that is supporting the whole rally from the 2009 bottom. The channel currently stands in the zone of $29.40 - $29.60. Second, the last swing low was at $29.52, which was obviously a place to watch for any potential bounce and lastly, the Golden Ratio or the 61.8% retracement level of the whole rally from the May 2012 bottom of $25.32 to the March 2013 top of $36.43 was at $29.56. The importance of the $29.40 - $29.60 zone is clearly evident from all this. Now we check the last two drops. The first one was the fall of $36.43 to $31.16, about $5.27 and the second one was from $35.32 to $29.86, about $5.46 and nearly equal to the first fall.

So the price action shows two nearly equal drops punctuated by a counter trend rally finishing near a very strong support zone. What can we expect then? At least a bounce to the last swing high at $35.32, if not a new high soon, as long as the support zone mentioned numerous times above holds.

We can see just a glimpse of a positive divergence in the MACD, which is not enough to warrant outright bullishness but the Double Bottom the RSI made is definitely interesting for the bulls.