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Devon Energy's Trading Range Breakout04/08/04 11:42:22 AM
by Kevin Hopson
Devon Energy has broken out of a bullish consolidation pattern, indicating higher prices ahead.
|Devon Energy (DVN) is one of the largest oil and gas exploration and production (E&P) companies in North America. Unfortunately for shareholders, it has been a very up and down year for the stock, making the short-term fluctuations hard to stomach at times. However, if recent developments are any indication of things to come, investors should be happy holding on for the long haul.|
|Graphic provided by: Stockcharts.com.|
|I say this because Devon looks to have broken out of a bullish trading range this week. Looking at the six-month chart, you will notice that Devon recently broke key resistance around the $59.00 level, which happens to be the top of the stock's one-month trading range (or sideways channel formation). From there, Devon proceeded to move above the top parallel line of the black pitchfork, which had previously turned back prices.|
|Now that Devon has broken out of its bullish consolidation pattern, the stock could eventually make its way up to the $66.00 to $69.00 range. I calculated this price target by taking the width of the trading range ($58.75 - $55.25 = $3.50), multiplying this by the number of times that prices tested the upper channel line (3) and then adding this figure ($3.50*3 = $10.50) to the bottom ($55.25 + $10.50 = $65.75) and top ($58.75 + $10.50 = $69.25) channel lines. As a result, I would look to accumulate shares of Devon Energy in anticipation of higher prices down the road.|
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|
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Date: 04/13/04Rank: 4Comment: