As the APA approaches $50, we update our technical strategy

On March 18, when we were reviewing oil and gas company APA Corp. (APA), we recommended that “APA – and crude oil prices – could trade sideways in the short term. Traders could use this sideways movement to build a long position in APA. Risk at $33. $62 is our initial price target, the stock has reached $50, so a further update is in order.

In APA’s daily bar chart below, we can see that stocks traded sideways in March and April, giving traders plenty of opportunities to go below $40. Prices resumed their uptrend in May and are once again trading above the rising 50-day moving average. The slope of the 200-day line is positive and prices do not extend above it.

The On-Balance-Volume (OBV) line is up and confirms price gains and tells us that ABS buyers remain more aggressive. The Moving Average Convergence Divergence Oscillator (MACD) has been above the zero line for much of the past year and is now in a bullish alignment above the line.

In the Japanese APA weekly candlestick chart below, we can see an uptrend with lower shadows below $40 but no upper shadows warning traders to reject the highs. The slope of the 40-week moving average line is positive.

The weekly OBV line is at a new high and confirms the strength of prices this year. The MACD oscillator is bullish.

In this daily Point and Figure chart from APA, below, we can see a price target of $55.

In this weekly Point and Figure chart from APA, below, we can see a price target in the $77 area.

Basic strategy: Continue to hold the long positions bought in March. Increase sell stop protection to $39 from $33. Our first price target is $55 followed by a longer term $77.

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