Origin Energy

Origin Energy (ORG) is a large-cap energy company, with operations in Australia, New Zealand, and the South Pacific region. The company has operations in the exploration and production of oil and natural gas; generating electricity; energy transportation and distribution; and the wholesaling and retailing of energy products.

In the most recent quarter, Origin’s production division boosted its output by 28% in the quarter and 22% over the year-ago period, in part due to bringing the Kupe (New Zealand) gas project online this fiscal year. The company’s 10% growth in sales revenue was attributed to increased third-party sales and, of course, the recovery in energy products prices.

Origin Energy has earnings per share of 0.74 and a price-to-earnings ratio of 20.32.

The stock ORG touched what seems to be an anomalous high of 19.99 in September 2008 (not shown below) before plunging to a low of 12.34 in early February 2009. On weekly charts, the price action appears to be gently rolling within a poorly-defined trading range, below:

Only when it’s noted that the range is equivalent to roughly one-third of the stock’s highest value, and almost half of its lowest, does the true volatility of this chart become clear. It’s an investor’s nightmare and a trader’s dream.

In the greater detail of the daily chart, the February 2009 low served as the initiation point for a bullish trendline that drove ORG from 12.34 to a 52-week high of 17.94 in January 2010, an eleven month ride. But the rally closed with a symmetrical triangle that broke to the downside in April, as shown on the analysed chart, below:

The break to the downside established a strong support-turned-resistance level at 16.00, and ORG has not been able to close above that level since 3 May. The price action is currently sketching an ascending triangle, drawn from the 52-week low of 13.85, which is exerting upside pressure on the resistance line.

The triangle’s apex is filling and as the consolidation matures, traders would generally expect resistance to break and the bullish trendline to drive the price higher again. However, it’s worth noting that the technical analysts’ analyst, Tom Bulkowski, estimates that only 70% of ascending triangles break higher and 30% disappoint.

Cautious traders may wish to await confirmation of the breakout prior to trading. Risk accepting traders may wish to enter the market long at the next touch (if any) of the bullish trendline.

technical analysis by Craig Liles