Please ignore the elliot wave markings on this chart as it is part of a greater analysis of CHK that I have been working on and is incomplete. I will however be mentioning some of my findings later on in this analysis.
The main reason I wanted to throw this chart out while it is incomplete, was to point out a possible trade to the long side here. What seems to be forming here is an ascending wedge, and by rule it can be considered complete. However the timing is puzzling as the last three times CHK has touched or at least came close to touching the upper trendline before beginning its' descent. What's more puzzling is that the earnings report released actually BEAT expectations and RAISED guidance. The perceived massive loss isn't what it appears to be. You can read more on that here: www.investopedi...rnings-chk.aspx?partner=Ya...
So far in my elliot wave analysis I have this pegged as either a B wave or a wave 4 in a c wave. Either way these are corrective waves and corrective waves can be unpredictable. While this wave can be called complete it can easily turn into a double zig zag which will allow price to touch the upper trendline.
What I am trying to say is this; despite todays' scary price action, this may be a great opportunity to try a long position here. You can have a tight stop set below todays low, or if you don't mind the extra risk, 14.19. Target for this trade would be 16.50-17.80. The risk-reward ratio mixed with the surprisingly upbeat earnings report is to huge to ignore. If however the bottom falls out tomorrow and price in CHK gets hammered or gaps down big, forget about it. That would indicate that the wave has completed and the next wave down to test the lows has begun.
The main reason I wanted to throw this chart out while it is incomplete, was to point out a possible trade to the long side here. What seems to be forming here is an ascending wedge, and by rule it can be considered complete. However the timing is puzzling as the last three times CHK has touched or at least came close to touching the upper trendline before beginning its' descent. What's more puzzling is that the earnings report released actually BEAT expectations and RAISED guidance. The perceived massive loss isn't what it appears to be. You can read more on that here: www.investopedi...rnings-chk.aspx?partner=Ya...
So far in my elliot wave analysis I have this pegged as either a B wave or a wave 4 in a c wave. Either way these are corrective waves and corrective waves can be unpredictable. While this wave can be called complete it can easily turn into a double zig zag which will allow price to touch the upper trendline.
What I am trying to say is this; despite todays' scary price action, this may be a great opportunity to try a long position here. You can have a tight stop set below todays low, or if you don't mind the extra risk, 14.19. Target for this trade would be 16.50-17.80. The risk-reward ratio mixed with the surprisingly upbeat earnings report is to huge to ignore. If however the bottom falls out tomorrow and price in CHK gets hammered or gaps down big, forget about it. That would indicate that the wave has completed and the next wave down to test the lows has begun.
