Did You Sell SeaDrill? Time to Buy Back Your Shares

SeaDrill's technical chart shows a predictable pattern. Here's how to trade on it.
By Richard Saintvilus ,

Shares of offshore driller SeaDrill Limited (SDRL) - Get Report have fallen from $3.47 to $3 in the past couple of weeks. The recent slide in oil prices have renewed concerns about the global glut, adding more pressure on oil companies to make money.

But if you sold your SeaDrill shares last month, you can breath a sigh of relief. Now it's time to play the potential rise in the shares. 

Where will the stock go? Here's SeaDrill's chart, courtesy of TradingView.

SDRL trades around $3.15 at present. The shares have declined 7% year to date compared with a 5.3% rise in the S&P 500 (SPX) index.

SeaDrill's chart has become predictable, given that its fundamentals, including its net debt position of around $10 billion, have deteriorated from the weakness in oil prices.

At $3.15, the stock is down some 10% since last month. You can see from the chart that the $3 area (green line) has served as support for the past several weeks. The stock, in fact, reached intraday lows of $3 three times in just the past five trading sessions. Expand that to seven trading sessions and it reached $3.04 once and $3.08 once.

The highs, meanwhile, in the past 15 sessions have been around $3.45 to $3.60. In other words, SDRL presents a tight trading range to can deliver anywhere between 15% to 20% by playing its charts patterns, which is what we've done in the past couple of months.

With the stock having bounced off its lows three times, SDRL can deliver possible gains of 10% to 15%, betting it can regain $3.45 to $3.60 in the next couple of days.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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