CONSOL Energy Inc., together with its subsidiaries, operates as an integrated energy company in the United States and internationally. The company operates through two divisions, Exploration and Production (E&P), and Coal. The E&P division produces pipeline quality natural gas primarily to gas wholesalers. The Coal division engages in mining, preparation, and marketing of thermal coal primarily to power generators, and metallurgical coal to metal and coke producers.
Take a look at the 1-year chart of CONSOL (NYSE: CNX) below with my added notations:
CNX has been consolidating over the past few months, while also forming a key level of resistance to watch at the $16 (red) mark. CNX has already tested that level twice, and it tested it a 3rd time yesterday. A break above that $16 level should lead to higher prices.
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The Tale of the Tape: CNX has a key level of resistance at $16. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $16.
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