The energy stock looking great as a short term trade

The price of oil has bounced and many traders are looking to profit from that strength before OPEC meets again in November. Most energy stocks have rallied somewhat and it can be hard to pick which one to trade here. One stock however exhibits a textbook trading pattern and could represent a very attractive risk/reward for you.

Beach Energy (BPT) had been falling for 6 months now, but closer inspection reveals that this price action is actually very bullish. Since finding a low in January, the shares more than doubled in value in the space of two months. In the next 6 months, it has been unable to retrace completely against that rally. We can now see a flag formation on the chart. Not only that, but we can now see a clear breakout last week on good volume. This formation is similar to the one we identified in August with WPL before it staged an impressive rally around their full year results. This means that BPT should now rally towards our target of about 90c. We would look to buy it in coming days on weakness as it comes back to retest the breakout zone. Traders would be wise to consider placing a stop under 60c. With a target of near 90c, this would represent an attractive risk/reward as a short term trade on the oil price.



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