Beach Energy Limited (BPT.AX) coiling above a daily trend break and finding support at $1.50.

In the month of August, Natural gas spot price finished up 44% and Oil up 8% to support what could be an undervalued company imbedded in the ASX during a pandemic, leaving most investors in limbo on where to invest their money.

Their full year annual report for 2020 stated NPAT (net profit after tax) of $461 Million which was down 18% from 2019, but still provided the business with a 20% return on shareholders equity.

BPT dropped 47% in the Covid sell down and is now starting to provide an attractive low risk opportunity.

Key Points:

  • Price holding above the 50 EMA
  • 21 EMA hugging 50 EMA and ready to break above with price action momentum
  • Price holding above Fibonacci 38.2% of prior major range (March Low to June High)
  • Natural Gas up 44% – Oil up 8% in August
  • Crossed daily trend line
  • Flag pattern for break out
  • Must watch price around the 200 EMA
  • RSI could break trend and range simultaneously for momentum

 

Key Levels:

Support – 1.40, 1.50

Resistance – 1.60, 1.70, 1.80 + 200 EMA

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – $1.50

Supporting Entry – $1.50 – $1.53

 

The Risk:

As traders and investors, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

 

IF: Price breaks below 1.45 and closes below the 50 EMA – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

 

Reward / Reward Targets:

Optimal Entry $1.50 – Target 1 $1.80 = 3.75x Reward to Risk

Optimal Entry $1.50 – Target 2 $2.00 = 6x Reward to Risk

Supporting Entry $1.53 – Target 1 $1.80 = 3.4x Reward to Risk

Supporting Entry $1.53 – Target 2 $2.00 = 5.5x Reward to Risk