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Brigham Exploration's Triangle Breakout

09/09/03 09:58:58 AM
by Kevin Hopson

Brigham Exploration has broken out of an eight-month bullish triangle formation, indicating higher prices ahead.

Security:   BEXP
Position:   Accumulate

Brigham Exploration (BEXP) has been consolidating for nearly eight months after breaking out to a new 52-week high this past January. More specifically, you will notice that the stock was forming a large triangle - a pattern of lower highs and higher lows - up until last week. Since symmetrical triangles tend to be continuation patterns and the long-term trend was up, a break to the upside was a good probability. As you can see, Brigham has now broken to the upside from the bullish triangle formation, thus confirming this theory.

So how high will the stock go now that the breakout has taken place? If you take the base of the triangle, or subtract the bottom trendline ($4.40) from the top trendline ($6.00), you come up with $1.60. When you add this number to the initial breakout point ($5.50), the approximate price target is $7.00 and change. As a result, Brigham looks to have additional upside potential in the short-term.

Graphic provided by:
Though the bottom blue parallel line may cap prices in the near-term, this trendline should only act as temporary resistance. Additionally, if the stock price proceeds to pull back, the $5.90 to $6.00 range - site of the stock's prior 52-week high (dotted red line) and the green median line - should act as significant support. As a result, I would look to accumulate shares of Brigham Exploration on a pullback to this price range.

Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

Glen Allen, VA
E-mail address:

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Date: 09/21/03Rank: 2Comment: 

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