Gran Tierra Energy Inc. (NYSE: GTE)

Gran Tierra Energy Inc., an independent energy company, is engaged in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Peru, and Brazil. The company’s acreage includes 3.4 million gross acres covering 17 exploration and production contracts in Colombia; 5.8 million gross acres covering 5 exploration licenses in Peru; and 47,734 gross acres covering 7 exploration blocks in Brazil. The company was incorporated in 2003 and is headquartered in Calgary, Canada.

Take a look at the 1-year chart of Gran (NYSE: GTE) with the added notations:

1-year chart of Gran (NYSE: GTE)

For pretty much the entire last year GTE had found a repeated area of support at the $6.80 (blue) area. The stock finally broke that support back in July and fell all the way down to around $6.25. Now that GTE has rallied back up to $6.80, and tested it as resistance, the stock should be moving overall lower from here.

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The Tale of the Tape: GTE had a key level of support at $6.80. Now that the stock has broken support, a trader might want to enter a short trade at or near the $6.80, with a stop placed above the level of entry. A break back above $6.80 could negate the forecast for a move lower.

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