BP Break Out Ahead of Earnings

Published on Monday, 06 February 2012 17:07 Written by David Becker

New York, February 6^th (TradersHuddle.com) – British Petroleum (NYSE: BP) continues to face headwinds due to the liability and claims that arose from the oil spill in the Gulf of Mexico.  BP has been working on mitigating the expenses of the oil spill, and it is likely to receive substantial settlements from other companies that had some involvement in the spill. In spite of significant legal expenses, this company has been reporting solid profits. In fact, BP is estimated to earn $6.15 per share in 2011 and $6.53 in 2012. The strong health of the company has created a break out to the upside.

BP broke out on a daily chart above resistance created by the high made in late October near 45.85.  The surge above resistance should create a test of the highs made in February of 2011 near $50.  Target resistance above $50 is $60.  Support on the large cap energy company is seen near the 20-day moving average at 44.60, and then the 50-day moving average near 43.20.  During the middle of December, the 50-day moving average crossed above the 200-day moving average, which added to the upward momentum of BP.

The relative strength index (RSI) edged higher in line with the upward movement of the stock price, but remains below the overbought level of 70, which continues to point to upward momentum for the stock.  Volume for BP has increased above the 50-day moving average pointing to increased activity as the stock moved higher.  The full stochastic is also showing a crossover, which could be a sign of further upward momentum.

The MACD (moving average convergence/divergence indicator), is hovering near the zero line which reflects little upward momentum.  The 12-day moving average / 26-day moving average spread is on top of the 9-day moving average of the spread, and has remained in a tight range as the stock chopped around during most of January.