KBR for the Long Haul

• Posted by Greg Harmon
• on July 28th, 2011

KBR Inc (ticker: $KBR) has been on my radar for a few months and it may be time to jump in with both feet. After posting better than expected numbers Wednesday night and giving higher guidance there is now no more news in the way. Let me explain why this looks attractive on all timeframe.

KBR, $KBR, Monthly chart

The monthly chart above shows that $KBR is in a bull flag and is working off an overbought condition.During this it has moved back within the Bollinger bands and the Relative Strength Index (RSI) is working lower. The Moving Average Convergence Divergence (MACD) indicator is still very positive as well. There is resistance from the all time high at 44.01 on a break out above the flag and a measured move to 54. Support comes at 34 on this timeframe and then 28 below. Moving to

KBR, $KBR, Weekly chart

weekly chart above shows the importance of the area between 36.70 and 37.30. This area is also just below the target of 38 on the break above the ascending triangle breakout from September. It is no wonder that this are is causing a pause in the form of a bull flag. A break above the flag would trigger a target of 52. On this timeframe the RSI is holding over the 50 mid line and the MACD is approaching a positive cross up as it rides the 20 week Simple Moving Average higher. Support comes at 34 and then 32 below. Finally looking to the daily timeframe below shows that

KBR, $KBR, Daily chart

$KBR has bounced off on the top of an expanding wedge for the fourth time and and in a support area among the Simple Moving Averages (SMA). Currently 36 is holding as support with 34 below on this timeframe and resistance at 38 with a target on a break of the wedge at 43.

In summary the monthly chart suggests a break above the flag with resistance at 44.01 and a target of 54. The weekly adds resistance at 52 as well, while the daily suggests a little work is needed to get above 38 to test first resistance at 43. All timeframes see support at 34 and the daily adds support at 36 as well. A long term trade where you risk $3 to make $15 or more, a reward to risk ratio of 5+:1 is not too shabby. Of Course you can also wait for the break of 38 to increase your odds.

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