Crackling With Energy

 | Aug 18, 2013 | 11:00 AM EDT
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Given the broad market's recent pullback, I'm currently looking at some potential buying opportunities. Noble Energy (NBL) is one of those names. For one thing, I'm seeing a larger bullish pattern in this one, as the price is above the 200-day simple moving average. In addition, a bit of a two-step pattern is starting to unfold.

So let's nail down some trading parameters.

Noble Energy (NBL) -- Daily
Source: Dynamic Trader

As I look at a potential buy entry, I'm interested in two support zones. First is a Fibonacci price cluster decision between $60.57 and $61.28, which includes the coincidence of at least five Fibonacci price relationships. Within this zone I see a price retracement, two price extensions and two 100% price projections. The second zone comes in between $59.69 and $60.10. This area includes a 0.618 retracement of a prior swing, as well as a 1.618 extension and a 100% projection of a prior decline.

If the stock tests and holds above one of these two zones, the plan will be to drill down to a 30-minute chart and start watching for a buy trigger to fire off. A trigger basically constitutes price action, along with an indicator, that tells us it is worth placing a bet against the support zone, as I extrapolate in this prior article.

Now, besides the price analysis, which is illustrated on the daily chart, I'm also looking at a clustering of Fibonacci timing cycles that suggest a possible low and reversal within the next week. The cycles come in between Aug. 21 and Aug. 26, with a particularly strong focus on Aug. 21 to Aug. 23. What this means is, if Noble Energy trades down into the support level inside of that next "time window," odds rise for the setup playing out as expected.

So let's stalk this one in the coming sessions and see if it starts to unfold according to plan. I cannot yet run the potential target, as a low is not yet defined, but a general target would come in somewhere above the $67.50 area.

I would back off the setup if both the support zones were violated.

Columnist Conversations

volatility is quite low here, and we could see some downsides here in the short term. ...



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