After a massive share price decline from mid-2018 to mid-2019, shares of HighPoint Resources Corporation (NYSE:HPR) are trying to stabilize. The good news is that so far, the stock has been in a trading range for the last half a year, keeping the bears at bay.
Another important signal we've noted is that we are starting to see higher lows in the chart (see annotated chart). What this is telling us is that there is a strong chance of a near-term share price rally that might be unfolding as the bulls seem to be gaining the upper hand of late.
To provide us with further confirmation that the bulls are in fact in control of share price movement in the short-term, we are looking to a key resistance level at $1.15 - $1.20.
With Friday’s close at $1.16, it’s anyone’s guess which way this stock will trade today, especially with ongoing jitters around the Coronavirus.
If we see further strength in the stock today, and a close above $1.20, that would be our confirmation that this stock is in fact breaking out.
Looking higher up, we see more resistance up at $1.40, $1.65, and $1.90. Should we get our entry signal (close above $1.20), we believe the bulls could take this stock back up to the $1.90 resistance, so we’d place a price target at $1.89 to capture those gains.
As for support, we would watch the $1.10 level (not shown on chart) as minor support, followed by more at $1.00 and $0.90. A move back below the $1.00 level, especially if we’re already in the trade, would concern us that the bullish sentiment is waning, so we’d place a stop loss at $0.88.
As mentioned off the top, the key to even consider this trade is a break and close above $1.20, specifically on strong volume. Based on a $1.20 entry level, our upside potential looks to be 57.5% while our downside risk is limited to 26.7%. We believe that this trade could be completed within the next two to four months.
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