Take a look at the 1-year chart of Energen (NYSE: EGN) with the added notations:
EGN has mostly trended higher since its October/December low. However, from January through July the stock has also created an important level of support at $60 (green). Expectations would be for a rally from here, but a break of the $60 would most likely mean a fall to the next level of support at $55 (red).
The Tale of the Tape: EGN has an important level of support at $60. A trader could enter a long position at $60 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead with the expectation of a fall down to $55.
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