ExxonMobil Surges Off Support

08/04/08 09:55:13 AM

by Arthur Hill

After a rather sharp correction from mid-May to July, ExxonMobil found support and surged on good volume. A little follow through would trigger a breakout.

Security: XOM
Position: Accumulate

Figure 1 shows weekly bars and the long-term trend. ExxonMobil (XOM) advanced from October 2005 to June 2007 and then embarked on a long consolidation. Broken resistance from the 2006 high turned into support throughout 2007 and into 2008. XOM bounced off this support level three times as it consolidated for over a year (blue arrows).

FIGURE 1: XOM, WEEKLY. Note that ExxonMobil advanced from October 2005 to June 2007 and then embarked on a long consolidation.

Graphic provided by: TeleChart2007.

The consolidation pattern looks like a large rectangle with support at 79 and resistance at 95. These are neutral patterns, but the prior advance (2006–07) argues for a bullish bias. A break above rectangle resistance would signal a continuation of the bigger uptrend. Think of the three-year pattern as a sharp advance and flat flag consolidation. This big rectangle is a long rest within the long-term uptrend.

With a rectangle in play on the weekly chart, traders should watch support and the daily chart for a bounce. In addition, 10-period relative strength index (RSI) hit 30 (oversold) for the second time this year and this coincided with a support test. The combination of oversold conditions and support improves the chances of a bounce.

FIGURE 2: XOM, DAILY. XOM bounced with a high-volume advance.

Graphic provided by: TeleChart2007.

XOM bounced with a high-volume advance (Figure 2). This move reinforces support and we should watch the next resistance level for a follow-through breakout. The May trendline and broken support mark resistance around 84.5 and a break above this level would reverse the two- to three-month downtrend. The first upside target would be a rectangle resistance around 95.

Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title:	Editor
Company:	TDTrader.com
Address:	Willem Geetsstraat 17
	Mechelen, B2800
Phone # for sales:	3215345465
Website:	www.tdtrader.com
E-mail address:	arthurh@tdtrader.com
Traders' Resource Links
TDTrader.com has not added any product or service information to TRADERS' RESOURCE.

Click here for more information about our publications!

PRINT THIS ARTICLE

Request Information From Our Sponsors

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

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

RECTANGLES

ExxonMobil Surges Off Support

SUBSCRIBE TO OUR FREE EMAIL NEWSLETTER!

SUBSCRIBE TO OUR FREE
EMAIL NEWSLETTER!