Currently, shares of Procter & Gamble Company PG are trading sideways on Wednesday. However, the stock appears oversold and hovers near an important support level, indicating a potential rally could be on the horizon.

The trading team has selected PG as our Stock of the Day due to its oversold condition and proximity to support, as stocks in similar situations have historically moved higher.

When a stock is described as ‘oversold,’ it implies that it has been significantly sold off, pushing its price below the typical trading range. This dynamic is crucial for traders who anticipate a reversion back into that range. Consequently, buyers may enter the market, applying upward pressure on the shares, which could propel the stock higher.

The red line on the accompanying chart represents a Bollinger Band, positioned two standard deviations below the 20-day moving average. When a stock dips below this threshold, it signals oversold conditions.

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As shown in the chart, this scenario is currently applicable to Procter & Gamble.

Additionally, the stock is currently at a support level. This means a substantial number of investors and traders are looking to purchase shares at or near the same price point.

When stocks reach a support level, it is common for a rally to occur. In these situations, some buyers, who initially contributed to the support, might start outbidding one another, realizing that sellers will lean towards buyers willing to meet higher prices.

A competitive atmosphere emerges as buyers increase their bids, leading to a bidding war that drives the stock into an uptrend.

Historically, every time P&G dropped below the Bollinger Band and approached the support level around $158.00, a rally followed. Given the current oversold condition at this critical support level, there is a strong possibility that the stock is poised for another upward move.

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