Playing the Setup in Chesapeake Energy
Published on Monday, 29 October 2012 06:52 Written by TradersHuddle Wire
New York, October 29th (TradersHuddle.com) - Chesapeake Energy Corporation (NYSE:CHK) closed the trading day at $20.10, near its 50 day and 200 day moving averages currently set at $19.74 and $19.94 respectively. Chesapeake's price action placed the stock above these important levels, which could translate into a trading opportunity.
Chesapeake Energy Corporation (NYSE:CHK) produces oil and natural gas. The Company's operations are focused on discovering, developing and acquiring conventional and unconventional natural gas reserves onshore in the United States.
Although, the price is above important moving averages, it's important to highlight that this is not a prime setup for buying the dip strategy, as the 50 day moving average is currently below the 200 day moving average.
The peaks and troughs algorithm shows calculated support at $18.41 and resistance at $21.66. These levels should also be evaluated by traders when planning their next move, as they provide an insight into the latest price action.
If traders want to establish a long position in Chesapeake Energy, it will certainly be better to wait, given that the stock is technically broken with the 50 day moving average trading below the 200 day moving average. Traders can also look at the current range defined by the peaks and troughs to establish a short trade versus those levels.