xom1-300x189 Swing Trading a Triple Top in Exxon Mobil Stock - XOM

Triple tops tend to be quite clear and distinct, such as the formation we see in XOM from June 21 to July 12, 2019. A bearish pattern, the challenge can often be finding an appropriate price target. Plus, going short from a breakout of a tall pattern, the risk-to-return may not always be favorable. In the case of XOM above, the risk/return is 2.50:1 if you were to take as your price objective the “low hanging fruit,” or the first target.

 

A typical entry point on would the breakout at [1] at the price of 75.40. Now, where to from there? The first target at [2] happens to be a combination of two different methods of deriving price targets: first, the June 6, 7, and 13 support at 74.40; second, a measured move approach (ala Thomas N. Bulkowski – L – ((H – L) * 40%)) gives us the same price level. 

 

For those who took this first trade, you can see that the target had already been hit.

 

Following the downward breakout, you can see that price (now at the time of writing) had pulled back. The initial breakout level at [3] might make for another good entry downward (assuming that it actually reverses), after which the original target at [2] or the next level of support at around the 74.85 range [4] or critical support at 70.65 shown at [5] might make for good secondary and tertiary targets. 

 

Note that the third top is only slightly lower than the middle top which, if the distances were wider, might indicate a stronger down move, but again, we’re not quite seeing this yet in terms of volume (selling pressure).

 

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