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Talisman Energy (TLM) broke out of a bullish trading range in mid-January 2005, indicating an upside target of $35.50 to $39.00. I calculated this target by taking the number of times that prices tested the top channel line in alternate sequence before breaking out (3), multiplying this number by the width of the trading range ($28.50-$25.00=$3.50) and then adding this figure ($3.50*3=$10.50) to the bottom ($25.00+$10.50=$35.50) and top ($28.50+$10.50=$39.00) channel lines. |
As you can see in Figure 1, Talisman reached the first price target ($35.50) in late February and proceeded to pull back. However, the stock found ultimate support just below the $32.50 level, which is the site of the bottom green parallel line and the 50% retracement level from the late January to February rally. Because prices have stayed within the green pitchfork since the beginning of this year, the current uptrend remains intact. |
Figure 1: Talisman. As you can see here, TLM reached the first price target ($35.50) in late February and proceeded to pull back. |
Graphic provided by: StockCharts.com. |
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There are only two things standing in the way. One is February's downtrend line, which is illustrated by the red line. The other is the green median line. Since these two trendlines have converged around the $35.50 level, Talisman will need to break resistance here for the second price target to come into play. If successful, look for a further move up to the $39.00 level in the near term. |
Glen Allen, VA | |
E-mail address: | hopson_1@yahoo.com |
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