Skip to main content

BP: How to Trade the Stock as Oil Giant Sets Net-Zero-Emissions Goal

BP shares are higher after the U.K. oil giant set a goal of net zero emissions by 2050. Here's what the charts say for BP stock.

BP Plc  (BP) - Get Free Report ADRs are up after the U.K. oil giant said it hoped to produce net zero emissions by 2050.

That's a long time but it's also a pretty big goal coming from the energy sector. As TheStreet’s Martin Baccardax said, it’s “now the fossil fuel industry benchmark.”

It’s unclear whether BP’s decision will lure some more environmentally conscious investors or most will continue to look at BP for what it is, an energy stalwart. 

In any regard, the announcement was enough to pique the interest of the Real Money team, which selected BP as its Stock of the Day.

If the latest announcement isn’t enough to get investors’ attention, perhaps BP’s reorganization will entice them. 

Or maybe its dividend yield - which is now 6.9% after management boosted the payout following the company's earnings report - will draw them in.

Let’s take a closer look at the charts.

BP is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BP? Learn more now.

Trading BP Stock

Weekly chart of BP stock. 

Weekly chart of BP stock. 

BP stock has not been doing all that well. But considering how poorly other giants - such as Exxon Mobil  (XOM) - Get Free Report and Chevron  (CVX) - Get Free Report - have done, along with the energy space in general, the shares have done a decent job of not collapsing. 

A look at the weekly chart above underscores a few key levels and trends that investors should be aware of.

First, last week had a very wide trading range in BP stock. For shorter-term traders, that range alone gives them something to go with. 

Above last week’s high near $37.75 and BP stock may have enough momentum to rally to $39. That would take it to 50-week and 100-week moving averages.

If BP stock pushes above those marks, a run to uptrend resistance (purple line) between $40 and $41 is possible. To clear this area, we'd need to see a serious change of character for oil stocks. But if BP can do so, it technically puts long-term resistance near $43 to $43.50 on the table.

Things get more interesting on the downside. Last week’s low near $35 correlated with a test of the 200-week moving average, as well as long-term range support near the $34 to $35 zone. But the shares recovered and closed above uptrend support (blue line).

Below uptrend support (now near $36) and investors need to be cautious, as a retest of $35 is certainly possible. If BP ends up below $34, investors must pay attention, as the stock will sit below its key support levels and may continue even lower.

The bottom line: Over $37.75 puts $39 and possibly $40.50 on the table. Below $36 and vital support is in play between $34 and $35.