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ARC Resources Ltd (ARX.TO) - January 16, 2024


With the price of oil stabilizing in the low $70s, the stampede of capital away from the Energy sector appears to have subsided and some money even appears to be starting to return to the group. Several Canadian energy stocks have started to work their way back up the rankings in the SIA S&P/TSX Composite Index Report.

ARC Resources (ARX.TO), for example, fell out of the green zone at the beginning of December. It stabilized in the rankings near the Yellow-Red zone boundary and has started to move up within the Yellow Neutral Zone. Yesterday, ARX.TO jumped 15 positions to 79th place, and it is up 28 spots in the last month.

Candlestick Chart:

Toward the end of last year, ARC Resources (ARX.TO) shares dropped back from near $23.25 back toward $19.00. More recently, the shares have started to bounce back and in doing so, suggest that the shares appear to be currently in a common pause for consolidation within an ongoing uptrend.

Last month, the selloff was contained near $19.00, successfully retesting a previous resistance level as new support. Since then, the shares have bounced back, regaining the $20.00 round number, and the 10-week average, and climbing back above an uptrend support line that had briefly been broken. Signs of a renewed accumulation.

Currently, upside resistance appears at the November peak near $23.25. A close above this would signal the start of a new advance with next potential resistance near the $25.00 round number, followed by a measured $27.50. Initial support appears at the 10-week average near $20.75 followed by the 20.00 round number.

Point and Figure Chart:

ARC Resources (ARX.TO) staged a big rally last summer which started when the shares broke out of a downtrend in July and then steadily advanced through to November. A recent correction ended with the shares completing a common 50% retracement of the previous X column (just enough to trigger a bearish High Pole Warning), and successfully retesting a previous breakout point near $18.80 as new support.

Currently, the shares are on an upswing. A close above $23.40 would complete a pending double top pattern and signal that the shares’ uptrend has resumed. Should that occur, next potential resistance may appear near $24.35 based on a vertical count, the $25.00 round number, or $27.40 based on a pending horizonal count. Initial support in a pullback appears near $20.35 based on a 3-box reversal, then the $20.00 round number.

With its bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) increasing to a perfect 10 out of 10, ARX.TO is exhibiting short-term strength across the asset classes.

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