HFC

Energy stocks have been rising in the last week. One possible reason for this is the natural gas shortage expected in Europe which will likely impact markets globally. While HFC does not participate in natural gas production, it is still benefiting from the boost.

Looking at the weekly chart, we can see that this boost comes at a critical time. Jun 2018 saw a peak that began a downtrend which lasted until Oct 2020. The possible trend reversal in Oct was given more weight with a break of the previous resistance line (1) in Feb 2021. Since Feb, the resistance line (1) has served as a support. A new resistance line (2) formed after the Mar 2021 peak and was broken last week. This possible breakout and return to an upward trend are supported by a support line (3) formed from Jul 2021 to now.

RSI and ADX indicators also show confirmation of a positive trend return. However, RSI shows close to oversold on the daily chart, and ADX is well below 20. On the weekly chart, ADX shows no conviction, and RSI has just crossed above 50.

A tight stop is necessary on this trade, and a price target at a previous support/resistance line provides the highest probability of success.