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Where Chesapeake Energy Might Trade in February

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Feb. 12 2019, Published 9:19 a.m. ET

Chesapeake’s implied volatility

On February 11, Chesapeake Energy’s (CHK) implied volatility was 72.5%, ~13.5% higher than its 15-day average. 

On the same day, CHK’s peers Range Resources (RRC) and Antero Resources (AR) had implied volatilities of 52.6% and 51.5%, respectively.

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Price forecast

Between February 12 and 28, Chesapeake Energy should close between $2.08 and $2.72 68.0% of the time. This forecast is based on CHK’s implied volatility of 72.5% and assumes a normal distribution of prices. On February 11, CHK closed at $2.4. The company’s upcoming earnings results could pull it into the lower limit of our price forecast range.

Moving averages

CHK’s 50-day moving average of $2.57 will be an important level to watch on February 27, when it releases its fourth-quarter earnings results. The next important resistance level for CHK stock will be its 20-day moving average of $2.76. This price level is close to the upper limit of our forecast. On February 11, CHK closed 27.9% and 37.8% below its 100-day and 200-day moving averages, respectively.

On the same day, the company’s 50-day moving average was 33.4% below its 200-day moving average. In technical terms, this crossover is called a “death cross.” Usually, a death cross is followed by more weakness. On February 11, natural gas’s 50-day moving average was 9.8% higher than its 200-day moving average. However, on the same day, US crude oil’s 50-day moving average was 20.3% lower than its 200-day moving average.

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