Borders & Southern Petroleum: Buy Low and Do It Right

The price on Border & Southern Petroleum (LSE:BOR) is offering a peerless opportunities for traders and investors to go long - doing so at a very cheap price. What is happening on the market generally presages a bullish bias, as it would be explained below. In the near term, it appears that the price is dropping at the moment (something that is expected to be temporary). The markets that are particularly difficult require approaches that are particularly creative.

Technical Forecast

From what happened to be a slow but steady downward bias, the company stock gapped down on July 16, 2012. That obnoxious gap would have been caused by some adverse fundamentals: the market closed at 62.25 on July 13, 2012 and opened at 20 on July 15, 2012. What a massive blow to the bulls! It was a big loss in the value of the company shares. What normally was supposed to follow was a serious trending move in the market, but it rather started trading in a tight range, as it is vivid that the sellers cannot push down the price farther downwards as a result of a great demand zone not far beneath the price. Technically, 2 indicators are used on the chart below. They are ADX period 14 and MACD. Both of the indicators are showing what is known as a Convergence Pattern, which normally happens when sellers are getting whipped as the market is poised to begin a significant or tardy rally. A bullish engulfing candle appeared on August 23, followed by the present pullback so far in the price. Why does this suggest buying low?

The ADX -DI is beneath its +DI counterpart (buying pressure) as the ADX line itself is clearly above the level 30 - all showing a strong trend. The MACD histogram is above the zero line as its signal lines are heading towards the zero line. This is a potential ‘buy’ opportunity for bulls. The price is trading at 25.5 when this article was getting prepared. The demand zones at 20.00 and 19.50 should do a great job in containing the bears’ appetite. The near term supply zones are at 30.00 and if broken to the upside, the next target would be 30.50. As speculators, we are aware that accumulation and distribution zones would eventually be tested and violated.  

Conclusion: As it is now logical to buy low, one must not forget to do it right. In this kind of market situation, sellers would hardly be sustained, and as a result, it could lead to reduced gains for them. There exist diverse methods and probabilities in growing and controlling our equity curves. We may consider economic news, chart prognostication or mix the two of them - while adding further filter. The issue is that you have to know how to do this, coupled with a learning curve and real market condition.

This article is ended with the quote below:

“It's better to live by the old adage, "I accept what the markets give me.’’’ - Joe Ross

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Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

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