MUR has formed a doji candlestick in the weekly chart during last week right on the support level after a long red candlestick. Followed by a long green candlestick it is considered a strong reversal pattern so Murphy Oil has become one of my stock picks in June. I expect Murphy Oil’s stock price to rise to $75 in the following weeks but a safer target is $66.80. I bought 300 MUR shares at $63 and have set a stop loss about $1.30 below, therefore the reward-risk ratio of my long position is 3-1.
According to the monthly stock chart of Murphy Oil the stock is clearly trending upwards, printing new highs and higher lows. Moving on to the weekly chart, MUR stock is currently trading at the support level of $63, which has been a very important resistance level in the past. Given the fact that last week’s candlestick was a doji with long shadows following a long falling candlestick, it would be a great trading setup if this week’s candlestick develops into a long green candlestick. Stock trading is all about picking correct entry points and justifying our decisions based on what market tells us.
Nothing prevents us from speculating that Murphy Oil’s stock might climb to 3-digit numbers like in 2008, but I can’t predict such a long-term move. For the time being I will be more that satisfied if this stock pick climbs to my first profit target and secure the first profits, while moving the stop loss up in order to convert the trade into a risk-free investment. Some would also identify a possible 5th Elliot Wave ready to start, which would be great if you hold any MUR shares right now. As always, paying close attention to the stock news and charts will prevent traders from losing their money, especially in case the support level is broken.
Disclaimer: I’m long MUR.