Vermilion Energy (VET) Forms A Clear Down Channel

Vermilion Energy, Inc. engages in the acquisition, exploration, development, and production of oil and natural gas. It operates through the following geographical segments: Canada, United States of America, France, Netherlands, Germany, Ireland, Australia, and Corporate. 

Take a look at the 1-year chart of Vermillion (NYSE: VET) below with my added notations…

Chart of VET provided by TradingView

VET has formed a slight down channel over the past couple of months. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance.  When it comes to channels, any (3) points can start the pattern, but a 4th test or more help to confirm it. 

The Tale of the Tape: VET has formed a down channel. A long trade could be entered on a pullback to the channel support, which is currently sitting near $18, or on a break of channel resistance. Short trades could be entered at channel resistance or if the stock were to break below the channel support.

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 

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