The American company engaged in hydrocarbon exploration in the United States, the Middle East, and Colombia as well as petrochemical manufacturing in the United States, Canada, and Chile, Occidental Petroleum Corporation (NYSE: OXY) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of OXY shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in pink color. The stock has currently broken out from it. Once the stock moves breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – OXY
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#3 Price above MA: The price is currently above the short-term moving average of 50-day SMA.
This usually implies a possible bullish bias for the stock.
#4 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines.
The +DI line and the ADX line are also currently above –DI line.
All these indicate possible bullishness.
#5 Support Area: The weekly chart shows that the stock had bounced back from a support area.
This is marked as a green dotted line in the chart. This seems like a good area for the stock to move higher.
Weekly Chart – OXY
#6 RSI Oversold: The weekly chart shows that the RSI is currently moving up after reaching oversold levels. This points to a possible reversal from the prevailing downtrend.
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for OXY is above $45.60. However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of OXY above previous daily close. This translates to a price above $40.75.
TP: Our target prices are $50 and $60 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $42.60 (for entry near $45.60) and $37.20 (for entry near $40.75). Note that this stop loss is on a closing basis.
Our target potential upside is almost 10% to 47% in the next 4-6 months.
- Entry near $40.75: For a risk of $3.55, our first target reward is $9.25 and the second target reward is $19.25. This is a nearly 1:3 and 1:5 risk-reward trade.
- Entry near $45.60: For a risk of $3.00, our first target reward is $4.40 and the second target reward is $14.40. This is a nearly 1:2 and 1:5 risk-reward trade.
Overall, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge pattern. 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