Following our report on Jan. 31, 2007 ($15.43 U.S.), El Paso rallied to a high of $22.47 in 2008 (A) for a 46-per-cent appreciation at that time. This high was followed by a reversal as the stock fell below its 40-week moving average (B) and then had a sharp selloff toward $5 (C). From this low the stock settled into a horizontal trading range mostly between $5.50 and $9.50 and then another higher range mostly between $8.75 and $11.25 (dashed lines). This price action produced a bullish technical pattern known as a Duplex Horizontal. The recent rise above $12 (D) signalled the breakout from this formation and the start of a new major up-leg. Only a decline below about $10.50 would suggest additional base building is required before the start of a new up-leg.
A rise above $12.50 would signal Point & Figure targets of $14 and $16. The large Duplex Horizontal (see dashed lines) supports higher targets.
Ron Meisels is a contributor to the www.NA-marketletter.com web site. Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary.