In trading on Tuesday, shares of Ecopetrol SA (Symbol: EC) entered into oversold territory, changing hands as low as $16.60 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In the case of Ecopetrol SA, the RSI reading has hit 29.7 — by comparison, the universe of energy stocks covered by Energy Stock Channel currently has an average RSI of 41.6, the RSI of WTI Crude Oil is at 34.5, the RSI of Henry Hub Natural Gas is presently 44.1, and the 3-2-1 Crack Spread RSI is 56.4. A bullish investor could look at EC's 29.7 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Looking at a chart of one year performance (below), EC's low point in its 52 week range is $15.25 per share, with $27.96 as the 52 week high point — that compares with a last trade of $16.62. Ecopetrol SA shares are currently trading down about 6.9% on the day.
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