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CHART ANALYSIS


Ultra Petroleum Rising Off A Recent Bottom

10/02/06 01:45:49 PM
by Gary Grosschadl

Ultra Petroleum put in a hammer bottom several trading days ago. So what are the upside targets?

Security:   UPL
Position:   Buy

Figure 1, a daily chart of Ultra Petroleum (UPL), shows a spring peak of $67.50 and a recent bottom near $42. This bottom area shows good volume, making the hammer candlestick more convincing.

Using three turning points, an Andrews pitchfork is plotted giving insight to possible lines of future support and resistance. Typically, if the pattern is good, the stock price will ride up between the tines of the fork and eventually will reach the median line or center line. After that, a return to the lower median line is likely as a support test. On rare occasions, a super bull move could carry beyond the median line to the upper median line. Note that on the way to the median line, the 200-day exponential moving average (EMA), currently 52.81, could also serve as a trading target to upside resistance.


FIGURE 1: ULTRA PETROLEUM, DAILY. This chart of UPL shows a bullish pointing pitchfork.
Graphic provided by: StockCharts.com.
 
Several indicators are also considered. The moving average convergence/divergence (MACD) shows a bullish turn and crossover of its signal line. In addition, note the positive divergence to price action. Similarly, the relative strength index (RSI) shows its own positive divergence as well as a move just above the often key area of 50. The stochastic oscillator is approaching the overbought area of above 80. Once this oscillator moves back down below 80, a downleg is likely.


In summary, upside targets are the 200-day EMA and the median line of the pitchfork. The pitchfork has a overall bullish bias as long as the lower trendline (lower median line) holds support.




Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

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Date: 10/03/06Rank: 5Comment: 
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