Some of the large integrated, U.S.-based oil stocks like [[CVX]] are breaking out of a big base. As you know, a big basing pattern is a long period of consolidation whereby a stock trades in horizontal fashion. During this extended period of time, it develops an area of support below and an area of resistance overhead. The “breakout” occurs when there is a significant move in the stocks price through the area of resistance.
I like how the PnF charts illustrate this. For a long time, CVX traded in a range from the high-$70’s to the low-$90’s. It’s now broken out of that range. This is a powerful move. Money on the sidelines now has some reassurance to jump on board.
More often than not, when a stock breaks out of a big basing pattern, it is very significant. The move will tend to be strong and will carry. In effect, the market is telling us that the stock is moving to new levels, and old resistance becomes new support.
Here’s another one:
Finally, keep an eye on [[XOM]], because it’s looking like a potential big base breakout.
Chart patterns are like maps. They can give you directions on which way to go. But they are not the only factor to consider in the decision to buy or sell. One also needs to consider the overall market, sector, trend and relative strength.
Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial advisor prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. The author may have a position in one or more stocks mentioned here. Trade at your own risk.
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