Cenovus Energy Inc. develops, produces, and markets crude oil, natural gas liquids (NGLs), and natural gas in Canada. Its Oil Sands segment develops and produces bitumen assets at Foster Creek, Christina Lake, Narrows Lake, and the Athabasca natural gas assets, as well as projects in the early stages of development, such as Grand Rapids and Telephone Lake. The company’s Conventional segment engages in the development and production of conventional crude oil, NGLs, and natural gas in Alberta and Saskatchewan in Canada, including the heavy oil assets at Pelican Lake. Its Refining and Marketing segment transports, sells, and refines crude oil into petroleum and chemical products.
Take a look at the 1-year chart of Cenovus (NYSE: CVE) with the added notations:
While trading mostly sideways over the past 10 months, CVE has managed to bounce on top of the $13 support (green) several times. Now that the stock has fallen back down to that support area again, traders should be able to expect some sort of bounce. However, if the $13 support level breaks, lower prices should follow.
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The Tale of the Tape: CVE has a key area of support at $13. A trader could enter a long position at $13 with a stop placed under the level. If the stock were to break below the support a short position could 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach