Woodside Petroleum – support zones
A strong rally in recent weeks; Shell’s exit from the share register and last night’s sell-off in oil, have combined to see Woodside’s share price tank. If, like me, you are attracted to this stock for its quality assets; conservative management and attractive dividend, you may be seeing this sell-off as an opportunity. Here are some potential chart support levels.
The first thing that stands out about this chart is a warning sign. The last 2 trading days have produced gaps. These are “continuation gaps” and one of the classic indicators of a high momentum trend.
It’s true that Woodside closed off its low and near its high today. But if you follow the old maxim of not trying to catch falling knives, the gaps and the current steep decline in the slow stochastic indicator, suggest caution. More evidence is required
A move to close this morning’s gap would provide some initial comfort.
However, a more conservative approach would be to look for price to start to settle down in a support zone perhaps forming a basing pattern or bouncing off support
I’ve pencilled in 2 possible supports. The first consists of past peaks and also picks up the 78.6% Fibonacci retracement of the latest uptrend. This zone is around $29.65-30.10
The second picks up the September and October lows between about $28.15 and $28.55.
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