After Golden Cross, O-I Glass (OI)'s Technical Outlook is Bright
OI Glass, Inc. (OI) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, OI's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."
There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, since bigger time periods tend to form stronger breakouts.
A successful golden cross event has three stages. It first begins when a stock's price on the decline bottoms out. Then, its shorter moving average crosses above its longer moving average, triggering a positive trend reversal. The third and final phase occurs when the stock maintains its upward momentum.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
Over the past four weeks, OI has gained 8.5%. The company currently sits at a #2 (Buy) on the Zacks Rank, also indicating that the stock could be poised for a breakout.
Once investors consider OI's positive earnings outlook for the current quarter, the bullish case only solidifies. No earnings estimate has gone lower in the past two months compared to 2 revisions higher, and the Zacks Consensus Estimate has increased as well.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on OI for more gains in the near future.
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