Working Money magazine.  The investors' magazine.
Traders.com Advantage

INDICATORS LIST


LIST OF TOPICS





Article Archive | Search | Subscribe/Renew | Login | Free Trial | Forgot ID?


PRINT THIS ARTICLE

CUP WITH HANDLE


A Potential Cup With Handle Pattern For Brigham Exploration?

11/13/03 11:40:32 AM
by Kevin Hopson

Brigham Exploration looks to be forming a cup with handle pattern but there are factors to consider when trying to confirm this.

Security:   BEXP
Position:   Hold

I touched on Brigham Exploration (BEXP) a few weeks ago, saying that the stock could make its way up to the $7.90 level in the near-term based on the bullish triangle breakout in early October. Though Brigham did not quite make it that high (topped out around $7.70), the projected move was correct, nonetheless. After topping out here (as illustrated by pivot point 1), the stock proceeded to pull back, eventually finding support along the green median line and the 50-day moving average. Since then, Brigham has made its way back up to October's high around the $7.70 level, as illustrated by pivot point 3. As you can see in the chart, the stock is finding near-term resistance at this level, which is also the site of the black median line.



However, if you look at pivot points 1, 2 and 3, you will notice a potential cup with handle pattern forming. Although it should be more of a U-shape (than a V-shape) at the bottom of this formation, the pattern is developed enough to warrant our attention. What you want to look for now is a sideways (trading range) or declining (falling channel) consolidation period on lighter volume. This is normally the setup before a breakout occurs. Also, Brigham should stay above the 38.2 percent retracement level from the Oct.-Nov. rally ($7.17) during this consolidation period. Any behavior other than that and the pattern will likely fail.

Graphic provided by: Stockcharts.com.
 
If things play out as they should though, watch for a breach of resistance at the $7.70 level (on higher than normal volume) as confirmation of a breakout. If Brigham is successful in breaking to the upside, the stock could make its way up to the $9.00 level in the near-term. I calculated this price target by taking the difference between pivot 1 and pivot 2 ($1.40) and adding it to the potential breakout point ($7.70+$1.40=$9.10). In the meantime, I would continue to hold shares of Brigham Exploration.



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: hopson_1@yahoo.com

Click here for more information about our publications!


Comments or Questions? Article Usefulness
5 (most useful)
4
3
2
1 (least useful)

PRINT THIS ARTICLE





S&C Subscription/Renewal




Request Information From Our Sponsors 

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

PTSK — The Professional Traders' Starter Kit
Home — S&C Magazine | Working Money Magazine | Traders.com Advantage | Online Store | Traders’ Resource
Add a Product to Traders’ Resource | Message Boards | Subscribe/Renew | Free Trial Issue | Article Code | Search

Copyright © 1982–2019 Technical Analysis, Inc. All rights reserved. Read our disclaimer & privacy statement.