The American multinational petroleum and natural gas exploration and production company incorporated in Delaware and headquartered in Houston, Occidental Petroleum Corporation (NYSE: OXY) show signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of OXY shows that the stock was trading within an uptrend channel for the past few months. This channel is marked in the daily chart in purple color. There were some unsuccessful attempts done to break out of the channel during these months. Currently, the stock has broken out of the channel. This shows that the stock has gained momentum and has the potential to move further up. Note that stocks typically retrace to the breakout level of the channel before its next upmove.
Daily Chart – OXY
#2 Above MAs: The stock is currently trading above both its 50-day as well as 200-day SMA. This indicates overall bullishness of the stock.
[hana-code-insert name=’adsense-article’ /] #3 MACD Above Signal Line: The MACD (blue) line is above the MACD signal (orange) line.This is a bullish sign.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#5 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Flag Pattern Breakout: As seen from the weekly chart of OXY, the stock was in an uptrend after which it started consolidating. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in purple color in the weekly chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case. The stock is also trading above both 50-week as well as 200-week SMA, indicating that the bulls are currently in control.
Weekly Chart – OXY
#7 Above Resistance Level: The stock has currently crossed above an important resistance level (marked as an orange blue dotted line). This would generally act as a good support level from now on.
#8 %K above %D: The weekly chart also shows that the %K line of the stochastic is currently above the %D line, indicating bullishness.
#9 Bullish RSI: In the weekly chart, RSI is above 50 and moving up. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of OXY if it corrects to around $80. For those with a higher risk appetite, you can purchase half the intended quantity of shares at the current price of $82.87.
TP: Our target prices are $95 and $110.
SL: To limit risk, place a stop loss around $77.90. Note that this stop loss is on a closing basis.
Our target potential upside is almost 14% to 38% in the next 4-6 months.
- Entry at $80: For a risk of $2.10, our target rewards are $15.00 and $30.00. This is a nearly 1:7 and 1:14 risk-reward trade.
- Entry at $82.87: For a risk of $4.97, our target rewards are $12.13 and $27.13. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 14x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel breakout level. 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
[hana-code-insert name=’MMPress 2′ /]