While viewing my energy portfolio this morning, I stopped and looked at the chart for Exxon Mobile (NYSE:XOM). I immediately noticed major resistance coming in at the $95 level. Can Exxon break through this major resistance level and take off to the upside?
If I measure from the resistance at $95 all the way down to the low in July of 2010, the difference is around $35. If I then add $35 to the breakout point, it takes us to my target zone of $130 per share for Exxon. Now remember, the market must move over the $95 level for this to happen.
Yesterday, I made a video on gold - you can watch it here. Today, I have been looking at a market that has a lot of potential on the upside based on its relationship to the gold market and a classic chart formation. This particular chart formation is one of the most reliable in the arsenal of patterns that I watch. Making this pattern even more powerful was the fact that our "Trade Triangle" technology kicked in today for the first time in six months for this particular stock.
The chart formation we are talking about is called a "head and shoulders" formation. This formation is well-known to any serious market technician as it has proven to be one of the most powerful and reliable formations over the years. Another positive about this formation is that it actually measures how far a move will travel on the upside or downside. You can have a "head and shoulders" top which would indicate prices going lower, or you have a "head and shoulders" bottom indicating prices going higher.