One under-$10 basic materials player that's starting to move within range of triggering a big breakout trade is American Eagle Energy (AMZG), which engages in the acquisition, exploration, development and production of oil and gas properties. This stock has been annihilated by the bears over the last six months, with shares down huge by 90.5%.
If you take a glance at the chart for American Eagle Energy, you'll notice that this stock has been trending sideways a bit over the last month or so, with shares moving between 14 to 15 cents per share on the downside and 20 cents per share on the upside. Shares of AMZG are now starting to spike higher off some near-term support at 15 cents per share and it's beginning to trend within range of triggering a major breakout trade above a key downtrend line. That trend line has acted as tough resistance for the last two months or so.
Traders should now look for long-biased trades in AMZG if it manages to break out above some near-term overhead resistance levels at 20 to 21 cents per share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 784,976 shares. If that breakout materializes soon, then AMZG will set up to re-test or possibly take out its next major overhead resistance level at 26 cents per share.
Traders can look to buy AMZG off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at 15 to 14 cents per share. One can also buy AMZG off strength once it starts to trend above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
