Energy Transfer Equity Has Rejected the Downside

 | Nov 13, 2017 | 10:09 AM EST
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Energy Transfer Equity L.P. (ETE) has been stuck in a sideways trading range of around $5 for the past twelve months. Are there any signs that this neutral range will result in an upside breakout? With prices roughly in the middle of this trading range, we could just flip a coin -- but let's examine the charts and indicators to see if we can handicap the next move.

In this daily bar chart of ETE, below, we can see the $15.00 to $20.00 trading range for ETE. Prices have crossed above and below the 50-day and the 200-day moving average lines several times in the past five months. If you look closely, you can see that the 50-day moving average line has been rising since the middle of August.

The On-Balance-Volume (OBV) line has been moving sideways since June -- suggesting a balance between buyers and sellers of ETE. But we can also see a brief dip in the OBV line in October, which was quickly rejected, indicating an underlying bid. The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line since February.

In this weekly bar chart of ETE, below, we can see that it has been trading around the flat 40-week moving average line. The weekly OBV line shows a slight rise in the past two months, suggesting that buyers of ETE on this timeframe have begun to be more aggressive. The weekly MACD oscillator is neutral, but it will not take much of a price rally or decline to turn this indicator bullish or bearish.

In this Point and Figure chart of ETE, below, we can see the sideways pattern since July (look for the "7" on the chart). There have been three declines on this chart since July and just one rally -- the path of least resistance should be higher. There is a $21.05 price target shown.

Bottom line: The path of least resistance, according to our Point and Figure chart is higher. Aggressive traders could probe the long side around current levels and on strength above $18.50, risking a close below $16.00.

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