Consol Energy

Consol Energy ( CNX) is an $8.5 billion coal and gas producer that's showing us another actionable upside trade right now. In Consol's case, the trade to watch is an inverse head and shoulders setup -- another technical formation that's been developing since the market's Aug. 8 decline. We're watching for a breakout above CNX's neckline before it becomes buyable.

The inverse head and shoulders is one of the most well known technical patterns out there -- but it's also one of the most effective. An academic study conducted by the Federal Reserve Board of New York suggests that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits that would have been both statistically and economically significant."

For traders to replicate that success, risk management is crucial. The deep shoulders on this setup make a protective stop a bit tougher to set -- to combat that, I'd suggest keeping a protective stop at the 50-day moving average. On the breakout, $54 is a conservative upside target.

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