Will Devon Energy recover?

Published on Tuesday, 24 August 2010 07:04 Written by Christian Paolinetti

New York, August 24th (TradersHuddle.com) - Shares of Devon Energy Corporation (NYSE:DVN) closed the trading session at $62.27 below calculated support at $62.79 breaking current long setups, raising concerns by the bulls, as this move might give the bears the upper hand.

Devon Energy Corporation (NYSE:DVN) is an independent energy company that is involved primarily in oil and gas exploration, development and production, the transportation of oil, gas, and NGLs and the processing of natural gas.

Devon's stock was trading in a well defined range with support at $62.79 and resistance at $66.21; given that this range was broken traders will be closely monitoring the stock?s price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that Devon's stock is still near the broken support, traders will be focusing on $62.79 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Devon Energy can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $62.79. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.