EOG Resources, Inc. (NYSE: EOG) is trading within a bullish Elliott Wave structure on the monthly chart. The company remains in a strong long-term upward trend, initiated from pandemic lows, signalling a powerful bullish phase.
EOG has completed a full market cycle, with red Waves I and II already in place. Following the end of Wave II at the corona bottom, EOG started an advanced phase, Wave III, known for its robust price expansion, supported by patterns from the 2020 low.
Wave Structure Analysis
The advance from 2020 is developing as an impulsive move within red Wave III. The internal structure, marked in blue, includes waves (1), (2), (3), and (4). Waves (1) and (2) established an upward trend, while Wave (3) delivered significant momentum, fitting typical third wave patterns. Wave (4) is either nearing completion or still forming.
We’ve seen EOG Resources trading within a tight range, which appears to be a consolidation phase known as a Wave (4). This sideways movement is occurring within a much larger and very strong bullish trend that has been in place since the 2020 lows. The market seems to be gathering energy before its next major move higher.
The fundamental picture supports this bullish technical setup, as WTI crude prices have recently stabilized above $88 per barrel, a level we didn’t see for much of the final quarter of 2025. Adding to this, EOG’s own investor guidance from late last year projected a modest increase in production for the first half of 2026. This backdrop of firming energy prices and stable operations makes a technical breakout more likely.
For the coming weeks, we are considering near-term call options to position for a potential breakout. Specifically, March and April 2026 contracts offer a way to capitalize on a move towards the initial $168.49 target. This strategy allows for leveraged exposure to the upside should the stock begin its next impulsive wave.
Managing Investment Risk
However, we must be mindful that implied volatility in the energy sector remains elevated after the uncertainty we witnessed in mid-2025. To manage the higher premium costs, using bull call spreads could be a more prudent approach. This would involve buying a call option and simultaneously selling another one at a higher strike price to reduce the initial investment.
Looking back at the sharp rally during 2022, which was part of the prior Wave (3), gives us a template for how quickly this stock can advance once it breaks from a range. A sustained move above the current consolidation highs would be the trigger we are watching for. This historical price action suggests that if a breakout occurs, momentum could build rapidly.
