I am leaning BEARISH on $Exxon Mobil(XOM)$ at these levels.
The daily chart above shows that the stock is trading in a bearish rising wedge pattern on the daily. This pattern is characterised by higher highs and higher lows and rising trend lines that eventually converge, usually cumulating in a breakdown below the wedge. In the current bear market, we have seen rising wedges in the middle of downtrends on major ETFs such as $SPDR S&P 500 ETF Trust(SPY)$ .
The stock has a neutral 14-day RSI of 51.98 (between 30 and 70) and is currently trading above the middle Bollinger Band.
So, how do we trade this? Based on how we have opened in pre-market with a gap down below the rising wedge, it is likely for the stock to backtest the lower trendline at open (i.e. we get a bounce move to about 108 or so). You could try to take CALLS (108C) with expiries 2-3 weeks out at open for a recovery bounce and an attempt to fill the downside gap, but do remember to take profits.
If we manage to break above the lower trendline, then I would suggest swinging CALLS (108C or 109C) expiring 3-4 weeks out if we can hold above it on the daily chart for a move back towards the upper trendline. Otherwise, if the stock closes below the lower trendline, then I would be looking for PUTS (107P or 106P) expiring 3-4 weeks out. Good luck everyone!
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