A Look into the Multi-Year Breakout Stocks
A key determinant of investors’ interest in the stock market is multi-year breakout stocks. The multi-year breakout simply means when the price of a stock, that has been moving within a range, finally breaks out of it and often signals upward movement. One can imagine this as a person who has been chained and moved restrictively, who finally breaks free. Such breakouts could be the indication that the stock is ready to move higher and hence it becomes very attractive to traders and investors.
As market conditions remain, most investors will be looking at which sectors may lead the next rally. The first point to realize is that the sectors which may move the market will always change. Actually performing the sectoral analysis helps in identifying which of the sectors would be doing well presently when compared with others. The following blog will consider the oil and gas sector, which is indicating promising signs of strength and, at the same time, possible breakout opportunities.
Oil and Gas Leader with Good Promise
The oil and gas sector has emerged of late as a formidable leader to drive the market rally. From an enormous amount of sectoral analysis, one can assess that this sector is faring better compared to other sectors like automobiles and banks. Charts and trends give us clues to the possible movements within this sector.
Beginning with the oil and gas sector, looking at a monthly candlestick pattern, one can view the nearly three-year sideways trend of the sector. However, with a recent breakout in the actions, the sector is apparently building up some momentum. The closing price above the resistance line on a weekly chart is a positive signal for potential growth.
Technical Analysis of Multi-Year Breakout Stocks
To illustrate the potential of multi-year breakout stocks in the oil and gas sector, the paper would look upon two stocks: ONGC and BPCL. While both have broken out after long periods of consolidation, there are enough reasons which may get one attracted to these stocks.
ONGC: A Closer Look
ONGC has shown a very strong break from all previous resistances. The monthly chart indicates more than one or two times when the stock was resisted, after which it finally broke out. It then retested the previous high and set a new support. This action could be interpreted to mean ONGC is heading to some potential gains, especially if it continues holding above the breakout level.
The weekly chart of ONGC is also showing the same trends, which once again goes on to reiterate how strong the position of this stock really is. The consolidation seen can be a hint that the stock is getting ready for a bigger up-move. Investors should watch closely as ONGC moves out of this breakout phase.
BPCL: Another Stock to Watch
There were also encouraging signals of a multi-year breakout in BPCL. Historic data indicate that the stock had received strong resistance at various levels in the past, but of late it succeeded in crossing them. The monthly chart shows a clear breakout and subsequent retest that is a crucial period to check for the strength gathering behind the breakout.
BPCL is seen to be almost moving in the same trend as that of ONGC; its recent breakout sets up a very strong position. Investors can take note of the stocks and see if it could further move up. Chances of more upside can’t be ruled out as the oil and gas sector is also doing well.
How to Invest in Multi-Year Breakout Stocks
One has to adopt a strategy for investing in multi-year breakout stocks. The key strategies are as follows:
- Creating Watchlist: Make a watchlist of stocks that show signs and signals of breakouts. This will help track the performance closely.
- Technical Analysis: Tools of technical analysis will help a lot in understanding price movements and resistance levels, which may indicate possible points of breakouts.
- Stay Informed: Keep up with market news and sector performance, which helps in assessing their possible impacts on the selected stocks.
- Pyramiding: Use pyramiding to increase gradually one’s position as the stock continues to perform well.
- Risk Management: Adopt risk management strategies to safeguard your investment in case the market goes against you.
Conclusion
The oil and gas sector can be termed one tough player in the existing market scenario. Stocks like ONGC and BPCL are showing early signs of multi-year breakouts. This can be considered a lifetime opportunity for an investor to reap benefits arising out of growth. One should be able to position oneself to benefit from these trends through effective technical analysis coupled with proper investment strategies.
This time, more than ever, one needs to stay informed and keep a constant eye on the changing trends of the markets. The investment world is dynamic in nature, and being proactive really helps create a difference between financial success and failure. Keep watching the Oil and Gas sector, as it can at any time emerge as the leader of the next market rally.
Disclaimer: The information is only for information purpose only. It is always recommended to consult with certified financial experts before making any investment decisions. Follow busymoneyfreak.com .