Tesoro Petroleum Is Breaking an Important "Neckline"

 | Apr 18, 2017 | 12:59 PM EDT
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Tesoro Petroleum (TSO) is breaking an important "neckline" on the daily chart. Whether you believe in chart patterns or not you should pay attention to the breakdown in this energy name.

In this daily bar chart of TSO, below, we can see how the $79 level has acted as support since October. Prices have broken down today below this neckline/support level, but the price structure had already turned weak. TSO was trading below the declining 50-day moving average line. Rallies this month have failed at the underside of the 200-day moving average line.

The On-Balance-Volume (OBV) line peaked with prices in December and has trended sideways since. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in early March, as it traded down below the zero line.

In this weekly chart of TSO, above, we can see that prices are now below the rising 40-week moving average line. The weekly OBV line looks like it is stalled, or even rolling over to the downside. The MACD oscillator is slipping below the zero line for an outright sell signal.

In this Point and Figure chart of TSO, above, we can see the support at $79.05 and the recent break of that support. Now $72.27 is the downside price target for TSO. A close below $70 is likely to open up further downside price objectives.

Bottom line: TSO has broken a key level and looks vulnerable to further declines to $72 or even $70. A close below $70, if it happened, would open the way to a deep decline.

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