Range Resources (RRC) has been trending lower since June. Prices have held the $32 area in November, January and so far in February. Do our indicators suggest the decline is mature and some price improvement could happen? Read further.
In this one-year daily view of RRC, above, we can see an eight-month price erosion starting with a small double top back in June. The 50-day moving average line peaked in July and the 200-day moving average line is now rolling over following a death cross of the 50-day and 200-day averages in November.
The On-Balance-Volume (OBV) line peaked in April leading the turn in prices. More recently the OBV line may have stopped declining at the end of December. We also see a bullish divergence between the equal lows in November and December/January and the higher lows from the momentum study. This bullish divergence tells us that the downside rate of decline has slowed and sometime this can foreshadow a rally.
In this three-year weekly chart of RRC, above, we have mixed signals. Prices are below the 40-week moving average line and the slope of the line is just now turning down. The weekly OBV line is neutral. In the lower panel is the weekly Moving Average Convergence Divergence (MACD) oscillator. This oscillator moves above and below a zero line and is open-ended in that there is no upper or lower boundaries. The oscillator is below the zero line, which tells you the trend is down, but the two averages that make up this indicator are on top of each other. A cover shorts buy signal is just as close as a fresh sell signal.
Bottom line: I think the upside will win out and RRC will manage to rally in the days and weeks ahead. The advance is likely to be a slow affair. A close below $31 keeps the bear in control.
