Pioneer Natural Resources Co. (NYSE: PXD)

Pioneer Natural Resources Company is an independent oil and gas exploration and production company with operations in the United States and South Africa. Pioneer is a holding company whose assets consist of direct and indirect ownership interests in, and whose business is conducted substantially through, its subsidiaries. The company sells homogenous oil, natural gas liquid and gas units. The Company provides administrative, financial, legal and management support to United States and South Africa subsidiaries that explore for, develop and produce proved reserves. The company’s continuing operations are principally located in the United States in the states of Texas, Kansas, Colorado and Alaska.

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

After trending higher since October, PXD has formed what appears to be a Double Top price pattern (red). Double Tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T). As with any price pattern, a confirmation of the pattern is needed. PXD would confirm this pattern by breaking the $100 support (navy) that has been created by the Double Top pattern.

Keep in mind that simple is usually better. Had I never pointed out the Double Top pattern, one would still think this stock is moving lower if it simply broke through the $100 support level.  So, whether you noticed the pattern or not, the trade would still be the same.

The Tale of the Tape: PXD has formed a Double Top price pattern with a $100 support level. Although a long trade could be entered on a pullback to the $100, the price pattern seems to imply an impending break of support. If that happens, a short trade should be placed with a stop set above $100.

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