Continental Resources, Inc. explores for, develops, and produces crude oil and natural gas properties primarily in the north, south, and east regions of the United States.
Take a look at the 1-year chart of Continental (NYSE: CLR) with the added notations:
CLR looked like it may have been trying to find a bottom as it formed a clear level of support at $35 (red). However, yesterday the stock broke down below that key support, which also sent CLR to a new 52-week low. If the stock rallies, traders could expect $35 to now act as resistance.
The Tale of the Tape: CLR has broken a key support level of $35, which was also a 52-week low breakdown. This should signal even lower prices ahead for the stock. A short trade could be entered in CLR on a rally back up to $35, with a stop set above that level. A break back above $35 could negate the forecast for a move lower and a long position might be considered 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