On a technical basis, I like ConocoPhillips (COP) -- and this is partly due to its general bullish pattern of higher highs and lows, as well as the fact that the stock is above its 200-day and 50-day simple moving averages. In addition, I'm seeing a Fibonacci price-cluster setup that includes multiple symmetry projections.
For those of you who are not yet familiar with "symmetry," my definition -- as it relates to the markets -- is similarity or equality when comparing price swings in the same direction. This is also known as a "measured move."
In the case of ConocoPhillips, two standout support zones are illustrated on the daily chart below. The first area comes in at $56.41 to $56.83, which includes a 50% retracement, along with at least five 100% projections of prior declines -- i.e., symmetry. The second zone comes in at $55.60 to $56.22, a zone that also includes at least three symmetry projections, along with a 0.618 Fibonacci retracement and a 1.618 extension.
So far the price is holding above the first zone, with a Dec. 31 low of $56.84. Buy triggers have followed this on both the 15-minute and 30-minute charts -- and, in Wednesday's session, I will watch for a possible entry on a pullback to that low, with the risk defined below that level.
If the price continues to hold above this area, target 1 will come in at $60.41 and target 2 at $61.39. Target 3 will come in at $64.20. A key hurdle on the way up, meanwhile, will come between $58.58 and $59.05. When an important hurdle is met as a setup plays out, I typically suggest that you trail up stops.
As far as a pullback entry is concerned, I will typically look for anywhere from a 50% to a 78.6% retracement back to the last low. This can be very easily calculated on most trading platforms via the Fibonacci-retracement tool. But, since this stock finished so close to the high Monday, I have not yet calculated the pullback zone here.
If the recent low doesn't end up holding, I will still look for subsequent buy triggers as long as one of these two key zones remains intact.
For more information on trades and triggers please refer here.
