WPL trading the range nicely

Technically Woodside Petroleum (WPL) is trading sideways and thus traders should look to trade the range it’s been in since July.

The 50-, 100- and 200-day moving averages are tracking sideways, thus Bollinger bands are a good way of trading in these conditions. The top band of the Bollinger band on the daily chart comes in at $39.39, so traders could look to short WPL around these levels. Although I am hesitant to think we will see the stock track to the bottom of the range at A$37.00 anytime soon.

The MACD is above zero, while the fact that the MACD is above the signal line suggests dips could be bought and short-term momentum is to the upside. The RSI (I’ve used a ten-day RSI) is showing better price strength at 65, although given its sideways pattern the RSIs can work well to highlight when stocks should be shorted. The textbook theory that stocks are overbought at 70 really only works in a sideways trending market.

Overall my bias with this stock (from a pure technical stand point) is to short the stock on moves to A$39.30 to A$39.50, although the downside looks fairly limited, so would need to be quite nimble with exit strategies.


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