The Trending123 Pattern Scan has uncovered two bullish technical setups in these natural gas and oil stocks — two that are very well-known, and the other a penny stock that could see some intermediate-term upside.
Head and Shoulders Bottom
Click to Enlarge Tesoro (TSO) has shown a head and shoulders bottom over the past 29 days. This pattern is created by three successive declines in the price following a significant downtrend. The lowest low (head) is in the middle, flanked by two higher lows (shoulders) at roughly the same level. Volume is highest as the price makes the first two declines, then diminishes through the right shoulder. Finally volume surges as the price closes above the neckline (drawn between the two highs) to confirm the reversal.
The price seems to have reached the end of a period of “accumulation” at the bottom of a major downtrend; the break up through resistance signals a reversal to a new uptrend.
Price Target: $61.75 – $63.00
Hess Corp. (HES) has developed an upside breakout over the past 87 days. An upside breakout represents a trading range in which prices move sideways between two parallel horizontal lines. It’s often a pause or congestion area within an existing trend though sometimes the breakout results in a reversal to the prior trend. Either way, an upside breakout through the upper resistance line signals an end to the consolidation period and the start of an uptrend.
This is a reversal pattern, so once the price breaks upward out of a trading range, it suggests we’re entering a new uptrend for HES.
Price Target: $84.00 – $86.00
A bottom triangle has developed, showing two converging trendlines as prices reach lower highs and higher lows. Volume should diminish as the price swings back and forth between an increasingly narrow range reflecting uncertainty in the market direction. Then well before the triangle reaches its apex, the price breaks above the upper trendline with a noticeable increase in volume, confirming this bullish pattern as a reversal of the prior downtrend.
Price Target: $0.85 – $0.87
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