Royal Dutch Shell plc operates as an independent oil and gas company worldwide. It operates through Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas, and natural gas liquids. It also converts natural gas to liquids to provide fuels and other products; markets and trades natural gas; extracts bitumen from mined oil sands and converts it to synthetic crude oil; and generates electricity from wind energy. The company holds interests in approximately 24 refineries; 1,500 storage tanks; and 150 distribution facilities. It sells fuels under the Shell V-Power brand. Royal Dutch Shell plc is headquartered in The Hague, the Netherlands.
Take a look at the 1-year chart of Royal (NYSE: RDS/A) with the added notations:
Like most energy related stocks, RDS/A fell on hard times during the summer and fall. Even recently the stock hit a new 52-week low. However, yesterday RDS/A actually broke back above the prior level of support at $60. That break should mean higher prices for the stock in the short-term, at minimum.
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The Tale of the Tape: RDS/A had a key level of support at $60 that it has now broke back above. A trader could enter a long position at $60 with a stop placed under the level. If the stock were to break below $60 a short position could be entered 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach