Oil has hard a remarkable rally from the March 2020 low, and further upside is favoured to take place in the energy sector still. There is one energy producer that has vastly outperformed many other producers, Torchlight Energy Resources. From an all time low of 21 cents set in September 2020, to the recent peak of 4.83, this stock represents high volatility price action. Lets take a look at the company profile and see what they do:
“Torchlight Energy Resources, Inc. (NASDAQ: TRCH), based in Plano, Texas, is a high growth oil and gas Exploration and Production (E&P) company with a primary focus on acquisition and development of highly profitable domestic oil fields. The company currently holds interests in Texas where their targets are established plays such as the Permian Basin and the Eagle Ford Shale.”
lets dig into the charts!
Torchlight Energy Resources Elliott wave View:
From the September 2020 low at 0.21, the trajectory on this stock is nothing less than extraordinary. The rally from the 0.21 September low to the 4.83 February peak represents a 2300% return within a few short months. It can be expected that a long and deep correction can be expected from such a rally. There is a clear 5 waves structure heading into the Feb peak. Coming out of an all time low in September 2020, this peak can be counted as the first wave of a long extended rally. From the Red I peak, prices sharply fell in a double correction ((W)) wave. After that, a connector in ((X)). After that, another swing lower to form a low in Red II.
The RSI momentum at the Red II low has a very extreme reading. Should the stock continue to fall lower than 1.27, it would likely diverge in momentum. This would would point to a more prolonged correction in time and price. For now, the bottom is favoured to be set as long as $1.27 level holds. Presently, the expectation is for a rally into blue (1) before pulling back in (2), and then further extension higher.
Above all, using proper risk management is absolutely essential when trading or investing in a volatile stocks. Elliott Wave counts can evolve quickly, be sure to have your stops in and define your risk when trading.