Halliburton stock reached as high as 74.33 in July, 2014, but oil’s crash took its toll on it. Currently, Halliburton’s shares are trading around 41.90, after recovering from the bottom at 27.63, registered on January 20th, 2016. So, is this rally going to continue and is it safe to trust it? The chart below might provide an answer. It shows the whole price development since the July 2014 top.
The Elliott Wave Principle is a market forecasting method, based on price pattern recognition. It states that trends move in repetitive patterns, called waves. Impulses consist of five waves and indicate the direction of the larger trend. Every impulse is followed by a three-wave correction in the opposite direction. Once the correction is over, the larger trend resumes in the direction of the impulsive sequence. Now take a look at the daily chart of Halliburton stock again.
The decline from 74.33 to 37.21 looks like a textbook five-wave impulse. So, the rest of the price action has to be some kind of a corrective pattern. In fact, it appears to be an expanding flat correction in progress. If this is the correct count, we should expect one last push by the bulls towards 50.20. However, it should not be considered a buying opportunity, because once wave C of (2/B) is over, Halliburton stock is likely to resume its downtrend in the face of wave (3/C) to the south. And you do not want to be on the long side when that happens.
