For today's chart we've chosen to take a look at EOG Resources Inc. (NYSE:EOG) because we've noticed a series of lower highs/lows (shown by the blue horizontal trendlines). As you can see below, the structurally lower highs are a technical indication of a confirmed downtrend and they suggest that the rally is becoming exhausted as it approaches the resistance of the descending trendline. Active traders will note how the bears have prevented the price from rising above the descending trendline in the past and many are wondering if this will be the case again. Technical traders may start to bet on a short-term move toward the October low near $58 and they will look to protect their positions by setting a stop-loss order above the high of $85.50.

We've also added the on balance volume indicator (OBV) to the bottom of the chart. The downward trend in this indicator suggests that investors are still looking for the exits and that the pressure is likely to continue. Some traders may want to hold a bearish outlook on this stock until the price is able to reverse the trend of sequentially lower highs.

For further reading, see Introduction To On-Balance Volume

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