Diamondback Energy (FANG), which operates in the Permian Basin, is at a crucial point as its stock approaches $170.15. This price has historically caused a sharp drop of about 35%, falling to $112 after failing to maintain that level, which significantly impacted the market. After touching $112, buyers slowly returned, leading to a steady recovery. This upward movement, characterized by consistent higher lows, has brought FANG back to $148. This suggests genuine interest in the stock, not just a temporary bounce.

Resistance Into Support

Now, the focus is on $170.15, where past support has turned into resistance. Traders who bought near this level may look to sell as the stock moves back to break even, making this a key psychological barrier. If FANG can break above $170.15, this could convert resistance into support, possibly pushing the stock to the $185-$195 range. On the other hand, if it fails to break through, it might drop again, possibly testing the $130-$125 support range and revisiting $112. Traders should stay patient. Bulls are waiting for a confirmed breakout, while bears are on the lookout for signs of resistance. The future of Diamondback Energy depends on whether $170.15 becomes a launching pad for growth or a continuous challenge.

Critical Resistance Level

Diamondback Energy is nearing the critical $170.15 resistance level, a point that has troubled traders since the breakdown back in 2024. That failure at support led to a painful 35% decline, making the current approach tense. However, this time WTI crude has risen over 15% in the last quarter to $88 a barrel, providing much-needed momentum that was missing during last year’s drop. For those anticipating a breakout, patience is essential until there’s a confirmed close above $172. With the implied volatility for January 2026 options reaching a six-month high ahead of this challenge, a bull call spread—buying the Jan $175 call and selling the Jan $185 call—could be a smart strategy. This approach defines risk while aiming for a price increase. Conversely, the memory of the past failure at $170 makes rejection a real possibility. If the stock weakens at this level, traders might consider bearish positions with a stop-loss just above $175. Given the higher implied volatility, selling a call credit spread with a strike above $180 could offer profit potential if the ceiling holds, just as it did before. A more cautious strategy is to wait for a pullback to the rising trendline, which is now around the $145 mark. Buying call options or shares with a tight stop just below this trendline provides a better risk-reward entry for anyone who misses the initial breakout. This strategy allows the market to confirm if buyers are still committed to sustaining the uptrend that began at the $112 low. Create your live VT Markets account and start trading now.

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