Key Takeaways
- ExxonMobil shares set a record high on Friday as investors bid up energy stocks over mounting concerns that escalating tensions in the Middle East could disrupt global oil supplies.
- The stock broke out above the top trendline of a symmetrical triangle last week on increasing trading volume.
- Investors should watch key upside targets on Exxon’s chart around $134 and $138, while keeping an eye on important support areas near $118 and $112.
Shares in ExxonMobil (XOM) could remain in focus this week after setting a record high on Friday as investors bid up energy stocks over mounting concerns that escalating tensions in the Middle East could disrupt global oil supplies.
The stock rose Friday despite a filing from the company on Thursday that said lower oil prices and refining margins will hurt third-quarter profit on a sequential basis. ExxonMobil is due to report its third-quarter results on Nov. 1.
The energy bellwether’s stock, which issues an attractive 3.04% dividend yield, trades about 25% higher since the start of the year as of Friday’s close. The stock gained 1.8% on Friday to close at $124.83, after hitting an all-time high of $125.19 during the session.
Below, we take a closer look at the technicals on Exxon’s chart and identify important price levels to watch out for.
Symmetrical Triangle Breakout
After setting their prior record high in early April, Exxon shares oscillated within a symmetrical triangle for five months before breaking out above the pattern’s upper trendline last week on increasing trading volume.
Moreover, the relative strength index (RSI) confirms bullish price momentum, though the indicator’s elevated reading nearing the 70 threshold also increases the chances of short-term pullbacks as investors lock in some profits following recent gains.
Let’s look at two potential upside targets in the stock, while also eyeing several key chart levels where the shares may attract support during retracements.
Upside Price Targets to Watch
Firstly, we’ll use the measuring principle to forecast a price target. This works by calculating the distance between the symmetrical triangle’s two trendlines and adding that figure to the pattern’s breakout point. For instance, we add $16 to $118, which projects an upside target of $134.
A more speculative method to determine a bullish price target involves using a bars pattern, a technique that uses historical price action to predict future moves. In this case, we’ll take the stock’s uptrend from January to April and reposition it from last month’s low, assuming a potential continuation move. This method projects an upside target of around $138, roughly in the same neighborhood as the measuring principle target.
Key Support Levels to Monitor
During dips, investors should initially monitor the key $118 level, an area on the chart likely to attract buying interest near last week’s breakout point, which also aligns with a multi-month trendline stretching back to January last year.
A deeper pullback would increase the risk of a potential bull trap and could see Exxon shares fall to the the symmetrical triangle’s lower trendline around $112, an area that currently sits in close proximity to the upward sloping 200-day moving average.
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As of the date this article was written, the author does not own any of the above securities.