Range Resources (RRC) has been correcting lower for five months. Yes the trend is still down, but that gives you time to do your fundamental homework on this technical turnaround.
Prices are holding above a support zone, and we see a bullish divergence between the price action and our price momentum study.
In this daily chart of RRC, below, we can see a three-month base, or bottom pattern, back in December to February. The rally got underway in earnest in early March, with strong volume and price gains. There were some consolidation patterns along the way to a June peak.
The correction over the past four months has been orderly, with volume getting heavier over the past six weeks. We note that prices were in a downtrend and RRC is still below the declining, 50-day moving average line. RRC broke below the 200-day average, but the slope of the average line is still positive.
Since June, the On-Balance-Volume (OBV) line has been declining -- telling us that sellers of RRC have been more aggressive, with heavier volume being traded on days when RRC has closed lower. The pattern of heavier volume in recent weeks could mean that RRC is down to a level that has attracted renewed interest.
What would we like to see now? We have a bullish divergence between the lower lows in price in September and October and higher momentum readings. This bullish divergence tells me that the rate of the price decline has slowed. Next, it would be good to see price rally above the 200-day moving average and then the 50-day moving average. Around $39 will do it. Later, a rally over $41 will break the downtrend line.
In this longer-term weekly chart of RRC, below, we find mixed signals. The slope of the 40-week moving average is positive. Yes, RRC is below the 40-week average line, but this may turn out to be a temporary situation. The weekly OBV line is neutral. In the lower panel is the 12-week momentum study. The peak in negative momentum was in September. Even though prices have moved lower, momentum readings are higher.
Bottom line: We are looking to go long RRC on closes above $39 and then $41.