The American petroleum and natural gas exploration and production company, Apache Corporation (NYSE: APA) seem to be poised for a bullish reversal as per its latest charts.
Bullish Indications
#1 Double Bottom: In the daily chart of APA, a double bottom pattern is being currently formed. This is shown in the chart in orange color. A Double bottom pattern is a bullish reversal pattern and a breakout from it usually indicates that the stock may move upwards shortly.
Daily Chart – APA
#2 RSI oversold: In the daily chart, RSI is oversold and is slowly moving up from oversold levels, indicating a possible bullish reversal.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stochastic: Stochastic is currently moving up from oversold levels.The %K line is also above the %D line. This indicates a bullish bias.
#4 MACD Above Signal Line: As you can see from the daily chart, the MACD line (blue color) has currently crossed above the signal line (orange color), indicating a bullish bias.
#5 Near Support: As you can see from the chart, the stock is currently trading near a long-term support level (shown as a light blue dotted line).
This seems like a good support point for the stock to bounce back.
#6 Bullish Candlestick pattern: The daily chart of APA shows that the stock has currently formed a bullish reversal candlestick pattern called piercing line pattern. This is marked as a blue ellipse. A Piercing Line pattern is a long red candle followed by a green candle. The green candlestick opens lower than the red candlestick’s low and closes more than halfway above the red candle’s body. It signals a bullish reversal during a downtrend.
#7 Double Bottom Pattern: The stock is currently forming a double bottom pattern in the weekly chart as well. A Double bottom pattern is a bullish reversal pattern, indicating that the stock could possibly move upwards shortly.
Weekly Chart – APA
#8 RSI near oversold: In the weekly chart as well, RSI is currently near oversold levels, indicating that a possible bullish reversal is around the corner.
#9 CCI moving up: The CCI indicator value has currently moved above -200 after reaching oversold levels. This indicates possible bullishness.
#10 Bullish Harami: The weekly chart shows that the stock has formed a bullish harami candlestick pattern. This bullish reversal pattern comprises a big red candle followed by a smaller candle. The body of the second candle would be engulfed by the first red candle. This pattern usually foretells reversal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of APA at the current price of $37.08.
TP: Our target prices are $48 and $60 in the next 3-6 months.
SL: To limit risk, place stop-loss at $33.50. Note that stop loss is on a closing basis.
Our target potential upside is 30% to 62% in the next 3-6 months. For a risk of $3.58, our target rewards are $10.92 and $22.92. This is a nearly 1:3 and 1:6 risk-reward trade.
In other words, this trade offers nearly 3x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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