Energy XXI (Bermuda) Limited (NASDAQ: EXXI)

Energy XXI (Bermuda) Limited is engaged in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. As of May 15, 2014, the company had proved reserves of 179 MMBOE. It operated or had an interest in 463 gross producing wells on 272,262 net developed acres, including interests in 41 producing fields. Energy XXI (Bermuda) Limited was founded in 2005 and is based in Hamilton, Bermuda.

To review Energy’s stock, please take a look at the 1-year chart of EXXI (Energy XXI, Ltd.) below with my added notations:

1-year chart of EXXI (Energy XXI, Ltd.)

EXXI has been trading primarily sideways for the last 6 months. Over that period of time the stock has formed a very strong resistance area at $24 (red). In addition, the stock has also created a clear level of support at $20 (green). At some point the stock will have to break out of its current consolidation.

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The Tale of the Tape: EXXI has levels of support at $20 and resistance at $24. The possible long positions on the stock would be either on a pullback to $20, or on a breakout above $24. The ideal short opportunity would be on a break below $20.

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

Follow me on Twitter: @cmtstockcoach