Carrizo Oil & Gas Inc. (CRZO) has made a bottom over the past six months, and aggressive traders looking for an energy play with some upside and a nearby risk point might read further. While the energy sector may not have the flash of the latest technology "thing" or the newest online retail offering, or Chinese IPO, it can deliver some upside when you properly pick your spots.
In this daily bar chart of CRZO, below, we can see that prices rallied above the flat 50-day moving average line in September and retested the now rising line in late October. Prices stopped short of the declining 200-day moving average line earlier this month, but we could soon see a close above that longer-term trend indicator. The On-Balance-Volume (OBV) line made a low in June and a retest in late August, but has been on the rise with the price action.
A rising OBV line tells us that buyers of CRZO have become more aggressive, with heavier turnover on days when prices close higher. In the lower panel is the 12-day momentum study, and the key thing to notice is the higher lows from June to August compared to the lower lows in price. The improving momentum picture is a bullish divergence and tells us that the pace of the decline slowed in the August/September lows.
In this weekly bar chart of CRZO, below, we can see the big decline over the past three years. Prices have come up in the recent months and they are now testing the declining 40-week moving average line. The weekly OBV line turned around in August and is pointed up.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to a cover shorts buy signal in late August and could cross above the zero line for an outright go long signal in the weeks ahead. This chart also shows that there is no anticipated chart resistance until the $32-$40 area from 2016 -- so there is potentially room to rally.
In this Point and Figure chart of CRZO, below, we can see a v-like bottom formation and a potential upside price target of $29.
Bottom line: An aggressive trader could long CRZO here and on strength above $21 where the 200-day moving average line intersects. I would risk a close below $15 and look for gains to $29-$30 area.