A last minute clutch play off and on the price chart sets Roku (NASDAQ:ROKU) up for a come-from-behind victory of its own. Even better, today’s bulls are in a winning position to take home an even larger technical trophy on the ROKU stock chart.
Upstart and leading streaming video on-demand platform Roku has a roster of media giants in its ranks. From Netflix (NASDAQ:NFLX), Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) YouTube, Disney’s (NYSE:DIS) ESPN, Disney+, Hulu or Apple’s (NASDAQ:AAPL) Apple TV, there’s seemingly something for everyone on Roku. Did I mention Amazon’s (NASDAQ:AMZN) Prime?
For Roku this past weekend it was all about the Super Bowl, Fox Corp. (NASDAQ:FOXA), and a fourth-and-ten style settlement to beat the clock. The agreement green-lit Roku’s Fox customers to stream one of the world’s most popular sporting events on FOX Now and Fox Sports just a day prior to the contest.
And after pleasing viewers with the ability to watch a come-from-behind victory, Roku investors showed their commitment to beat back the bears in similar fashion.
ROKU Stock Weekly Chart
Source: Charts by TradingView
Roku has been in the process of forming a much-needed technical correction the past couple months. Shares established a downward-sloping wedge or triangle-like consolidation following a bearish lower-high candlestick in late November.
And ROKU stock appeared on its way towards another bearish leg within its correction this past week as shares briefly broke pattern support. But conditions have quickly turned for the better for bullish investors.
The business agreement with Fox has dismantled the bears’ stranglehold on shares. The provided weekly chart shows Roku has reversed in price to trade back above resistance inside the congestion pattern. It’s a bullish step to be sure. And coupled with Roku sporting a supportive oversold stochastics crossover, as well as successfully testing the higher of two Fibonacci-based support zones, a meaningful low could be building in shares. So, what should investors do?
One strategy for investors is to buy shares if pattern resistance near $137 is broken. The entry is still a few percent above current market prices, but Roku’s volatility stresses having a buy order ready. A price signal could happen faster than you think.
I’d recommend a blended stop-loss of $127 on any breakout positions. On and off the price chart, this looks like ample leeway, while also avoiding playing ROKU stock’s volatility too close to the vest.
Alternatively, another game-winning play to buy shares is to purchase Roku on weekly price confirmation a higher-low pivot is in place. This method of entry signaled Tuesday as the stock traded above last week’s candlestick high of $131.80.
The big picture suggests Roku could be developing a bullish “W” base and this purchase takes full advantage of this possibility. Here, I’d suggest a stop using the pattern low of $120.35. The risk is modestly larger than the breakout entry, but smartly avoids staying long-and-wrong if the bears’ offense shows up again on the Roku price chart.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits