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Brigham Exploration's Triangle Breakout

10/09/03 08:10:04 AM
by Kevin Hopson

Brigham Exploration has broken out of another bullish triangle formation, indicating the potential for higher prices ahead.

Security:   BEXP
Position:   Hold

I touched on Brigham Exploration (BEXP) a few weeks ago when the stock broke out of a seven-and-a-half-month bullish triangle formation. At that time, I recommended accumulating shares of Brigham Exploration, as the triangle breakout indicated higher prices ahead. More specifically, my short-term price target was $7.00. As you can see in the one-year chart, the stock met my price target and proceeded to pull back.

However, little did I know that the stock was going to follow this up with another bullish triangle formation. Just to illustrate, Brigham formed a pattern of lower highs and higher lows after September's run-up, which is indicated by the black trendlines. Since symmetrical triangles tend to be continuation patterns and the trend was positive, a break to the upside was likely.

Graphic provided by: Stockcharts.com.
 
Now that this has occurred, it will be important to see if Brigham can overcome a double top around the $7.25 level, as indicated by the red line. If so, the stock could eventually make its way up to the $7.90 level. I calculated this price target by measuring the base of the triangle (high point minus low point) and adding it to the point of the breakout. Since the base of the triangle is approximately $1.00 and Brigham broke out of its bullish triangle formation around the $6.90 level, my estimated price target is $7.90. However, I would wait for a break of resistance at the $7.25 level to confirm such a move.



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

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