Southwestern Energy Co. ( SWN) -- a natural gas company -- just last week reported quarterly earnings. Let's check out the charts of SWN -- which is also a Stocks Under $10 holding -- after we look at surging natural gas futures prices.
In this weekly natural gas futures chart, below, we can see a strong picture. Prices have soared higher the past two years. Prices are trading firmly above the rising 40-week moving average line but not extended above it. The weekly On-Balance-Volume (OBV) line is strong and confirms the price action. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bullish and tells us the rally has further to go.
In this daily chart of SWN, below, we can see that prices traded sideways with resistance around $6. An upside breakout can be seen in late March. Prices are above the rising 50-day moving average line and the rising 200-day line. The On-Balance-Volume (OBV) line has been rising all year and leads the price action. The Moving Average Convergence Divergence (MACD) oscillator has been correcting lower but remains above the zero line and has started to narrow toward a new buy signal.
In this weekly Japanese candlestick chart of SWN, we went back further in our research to show a large inverse head and shoulder bottom pattern. A neckline at $6 is easy to imagine but is not drawn on this chart. Prices trade above the rising 40-week moving average line. The weekly OBV line is bullish and so is the MACD oscillator.
In this daily Point and Figure chart of SWN, below, we can see a potential upside price target in the $17 area.
In this weekly Point and Figure chart of SWN, below, we used a five box reversal filter and can see a $14 price target. This could change as the chart develops.
Bottom line strategy: Traders could go long SWN at current levels risking below $6.50. Add to longs on strength. The $17 area is our price objective for now.
