WPX Energy Inc (NYSE: WPX)

WPX Energy, Inc., an independent natural gas and oil exploration and production company, engages in the exploitation and development of unconventional properties in the United States. The company focuses on exploiting natural gas reserves base and related natural gas liquids in the Piceance Basin of the Rocky Mountain region, as well as developing and growing oil positions in the Williston Basin in North Dakota and the San Juan Basin in the southwestern United States. As of December 31, 2014, it had proved reserves of 4,360 billion cubic feet of gas equivalent.

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

1-year chart of WPX (NYSE: WPX)

After its steep decline towards the end of last year, WPX has been trading in an overall sideways move since the beginning of 2015. And during that time, the stock had also created an important level of support at $10 (red). Now that the stock has broken that support, lower prices should follow.

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The Tale of the Tape: WPX broke a key level of support at $10. A trader could enter a short position on any rallies up to or near $10 with a stop placed above the level. If the stock were to break back above the $10 level, a long position might 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!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach