EOG Resources (EOG) broke out on the upside recently from a pretty impressive base pattern. Let's examine the latest charts and see how far this breakout could carry.
In this daily chart of EOG, above, we can see how prices rallied over the rising 50-day moving average line this past Thursday. On Friday, prices gaped to the upside, breaking above the June highs. Yesterday, prices continued still higher, breaking over the November highs. Prices are above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been moving upward from a low in January. A rising OBV line means that buyers have been more aggressive, with more shares traded on days when EOG has closed higher. A rising line confirms the price action and gives us confidence that the trend should continue. In the lower panel is the 12-day momentum study and we do not see any bearish divergences to suggest the uptrend is slowing.
In this three-year weekly chart of EOG, above, we can see a similar bullish picture to what we just saw on a daily scale. Prices are above a flat 40-week moving average line. The OBV line on a weekly timeframe has been rising since its January 2016 low. The trend- following Moving Average Convergence Divergence (MACD) oscillator is above the zero line in positive territory and rising -- a bullish configuration.
Taking a measurement of this base pattern from the low to the "neckline" that intersects around $85 and projecting it upward from the recent breakout gives us a price target or objective of $110. A close back into the recent sideways $78-$85 consolidation pattern would upset the bull case and prompt us to liquidate longs.