Oasis Petroleum Inc., an independent exploration and production company, focuses on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. The company’s principal projects are located in West Williston and East Nesson. As of December 31, 2014, it had 505,503 net leasehold acres in the Williston Basin; and approximately 272.1 million barrels of oil equivalent of estimated net proved reserves. The company sells its oil and natural gas to refiners, marketers, and other purchasers that have access to pipeline and rail facilities.
Take a look at the 1-year chart of Oasis (NYSE: OAS) below with added notations:
After a persistent selloff in June and July, OAS has started trading sideways over the past month. While in the sideways move, the stock has formed a key pair of price levels that are worth watching. OAS has a resistance at $12 (red), which was also support earlier in the year, and an $8 support (green). At some point one of those levels will have to break.
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The Tale of the Tape: OAS is trading inside a trading range. The possible long positions on the stock would be either on a pullback to $8 or on a breakout above $12. The ideal short opportunity would be on a break below $8.
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
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