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PXD on the 10’s - the Mesh Report

PXD on the 10’s

Christian Tharp, CMT October 27, 2011 0

Pioneer Natural Resources Company is a holding company. It is an independent oil and gas exploration and production company with existing operations in the United States and South Africa. It explores, develops and produces oil and gas reserves. The Spraberry oil field located in West Texas, the Raton gas field located in southern Colorado, the Hugoton gas field located in southwest Kansas and the West Panhandle gas field located in the Texas Panhandle anchors its asset base. It has exploration and development opportunities and/or oil and gas production activities in the Eagle Ford Shale and Edwards Trend areas of South Texas, the Barnett Shale area of North Texas and Alaska, and internationally in South Africa. Its production operations are located in Texas, Kansas, Colorado and Alaska, and internationally in South Africa.

To review Pioneer’s stock, please take a look at the 1-year chart of PXD (Pioneer Natural Resources Company) below with my added notations:

(Click for full-sized image)

PXD has been selling off since April. However, over the last month the stock seems to be making an attempt to break out of its downtrend. On it’s way down, and now back up, the stock has usually found important price levels at each increment of $10. The stock bottomed at $60 (blue), found support at $70 (teal) in August & September while hitting the $80 resistance (navy) at the same time. So, if the stock moves higher, might a trader expect $90 (light blue) to be the next resistance?

 

The Tale of the Tape: PXD seems to be breaking higher. The stock has created price levels at $60, $70 and $80. A long trade could be made on a pullback to $80 with an expectation of a run to $90. In that case, a stop should be placed under the $80 level.  A break of the $80 support would negate the forecast for a move higher and a short trade could be made instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

 

Good luck!

Christian Tharp, CMT



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