Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas.
Take a look at the 1-year chart of Diamondback (NASDAQ: FANG) below with added notations:
FANG has been trending overall higher since last July, while recently stalling twice at the $135 level (green). That level was also FANG’s 52-week high resistance barrier, and now that the stock has broken above it, traders could look to enter a position on a pullback down to the $135 area.
The Tale of the Tape: FANG broke its 52-week resistance at $135. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $135 could negate the forecast for a move higher.
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