Bullish Wedge On Canadian Natural Resources (CNQ)

Canadian Natural Resources Ltd. is an oil and natural gas production company, which engages in the exploration, development, marketing, and production of crude oil and natural gas. It operates through the following segments: Oil Sands Mining & Upgrading; Midstream & Refining; and Exploration & Production.

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

Chart of CNQ provided by TradingView

A declining wedge has formed on the chart of CNQ. A declining wedge price pattern is a form of triangle in which the stock has created a down trending resistance line and a down trending support line (green). These two trend lines converging on one another combine to form a declining wedge, which is viewed a bullish pattern. 

Confirmation of this pattern would occur if the stock broke through the down trending resistance. 

The Tale of the Tape: CNQ has formed a declining wedge pattern, which should lead to higher prices for the stock if the pattern confirms. A long trade could be entered on a break above the wedge resistance with a stop placed below that level.

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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