Weatherford International Plc (NYSE: WFT)

Weatherford International public limited company, together with its subsidiaries, operates as a multinational oilfield service company worldwide. It offers equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells. The company operates through three business groups: Formation Evaluation and Well Construction, Completion and Production, and Land Drilling Rigs.

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

1-year chart of Weatherford (NYSE: WFT)

Over the course of the past ten months, WFT has tested the $5 level (green) as support on multiple occasions. Even though the stock had dipped below that level in May, WFT had always managed to hold the $5 level. However, yesterday, the $5 level broke, and now the stock should be taking another leg down.

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The Tale of the Tape: WFT broke a key level of support at $5. A trader could enter a short position on any rallies up to or near $5 with a stop placed above the level. If the stock were to break back above the $5 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