BP (LSE:BP.) shares have spent much of the past decade fluctuating between 400p and 600p. The upper level has acted as both a psychological barrier and a technical ceiling, stopping earlier rallies in 2018 and 2023 before the price fell back.

Now, after a third push, the shares have made a decisive move above 600p, reaching a 16-year high. That makes the breakout worth taking seriously.

Why the third attempt matters

A resistance level is a price where selling has repeatedly overwhelmed buying. When a share approaches it and retreats, that failure can reinforce the ceiling. Analysts often watch for a third attempt, because a sustained move above the level can suggest a shift in the long-term narrative.

BP’s chart tells that story. The shares briefly flirted with the 600p level in late March, pulled back to retest it during the summer, before finally breaking through on 13 October.

According to the London Stock Exchange, the shares traded as high as 619p on 19 October, beating its prior March peak of 592.2p. But while surviving a retest is convincing, price movements alone shouldn’t dictate investment decisions.

The real test is fundamentals

Importantly, this move isn’t happening in a vacuum. BP’s third-quarter trading statement, published on 13 October, said net debt is expected to fall to $13.5bn-$14.5bn. That’s down from $22.3bn at the end of June, achieving a target originally set for 2027 roughly a year early.

Stronger refining margins and gas trading support continued cash generation. But there’s a caveat. The oil major expects post-tax impairments of $3bn-$4.5bn in the quarter, mainly linked to transition businesses in its gas and low-carbon energy segment.

Still, lower debt and stronger operating performance suggest the chart’s confirming a fundamental turnaround, not merely a short-term oil-price rally.

What comes next?

If 600p now becomes support rather than resistance, the next major test is 650p. A move through that area would clear BP’s 2010 high and strengthen the case for a longer-term breakout.

Berenberg recently raised its price target from 650p to 715p and kept a Buy rating, citing stronger refining earnings, balance sheet improvement, and the prospect of renewed shareholder returns.

The next major catalyst is the company’s strategy update on 15 December. It will be new chief executive Meg O’Neill’s first chance to set out detailed plans.

Reportedly, the update is an opportunity to set out “the next phase of delivering a simpler, stronger and more valuable BP”.

The bottom line

Psychologically, this breakout could be a defining moment for BP. For the first time in a decade, its chart and balance sheet are telling a similar story. That alone deserves consideration. But it doesn’t confirm anything in itself.

The shares are already up 41.1% this year, leaving it with a price-to-earnings (P/E) ratio above 24.

To attract new buyers at this high valuation will require careful execution. Oil prices, refining margins and December’s strategy update remain key risks.

Still, the breakout isn’t without merit – it’s backed by deleveraging and stronger cash generation. For me, the real confirmation would be BP holding above 600p while beating estimates at the next earnings call.

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Mark Hartley owns shares in BP.