ConocoPhillips (NYSE: COP)

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids worldwide. The company primarily engages in the tight oil reservoirs, LNG, oil sands, and other production operations.

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

During the past few months, COP had formed a very important level of support at $65 (green). Earlier this week, the stock break below that support. Not only does that imply lower prices for COP, but the $65 level should now act as resistance on any future rallies.

The Tale of the Tape: COP broke a key level of support at $65. A trader could enter a short position on any rallies up to or near $65 with a stop placed above the level. If the stock were to break back above the $65 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