Falkland Oil and Gas: Bulls Are Recalcitrant

The company shares of Falkland Oil and Gas (LSE:FOGL) are showing strong determination to keep going up, as the technical explanation below reveals. The long-term trend on the company price chart has been bullish; despite the turbulent past. The price has become inebriated by incessant bullish pressure. A potentially new phase of the dominant trend has been identified and would be monitored. But I would like to point out that an idea used for following a line of the least resistance does not preclude the usefulness of other similar ideas.

Technical Forecast

The price movement on the Falkland Oil and Gas chart has been turbulent and volatile so far in the year 2012. Those who traded with tight stops would have been whacked unless they entered with high reward and low risk trading strategies. In this analysis, I make use of 4 Simple Moving Averages: SMA period 10, SMA period 20, SMA period 50 and SMA period 200. You may take a look at the chart below. On the top left side of the chart, you would see the values for those SMAs and the color that stand for each them on the chart. In July 2012, heavy bearish pressure brought the price to the SMA 200 (which shows that the long-term trend of the stock is bullish). On July 19, further bearish plunge was checkmated by the SMA 200, which serves as a great demand zone, and therefore preventing the classical Death Cross on the chart. Bears flailed and floundered as the price tested the SMA 200 several times before their desperate effort thinned out. The price was given a new lease of northbound energy after this - the price has wheeled upwards.

In order to apprise the present scenario further, a gap-up which occurred on August 6, 2012 has been followed by further bullish momentum. This means that we should anticipate volatile movement on this market, more probably to the upside. At the present, there is a candlestick pattern called a ‘hanging man,’ which shows that the attempt by sellers to pull down the price was foiled by buyers (especially in this context of an uptrend). The market was trading at 90 when this article was being prepared. The nearest distribution zones are 90.50 and 91.00 and the nearest accumulation zones stand at 90.00 and 80.50. The latter zones should work in support of the bull’s interest.

Conclusion: A meaningful speculation technique proffers a clean series of criteria for trading on medium-term observation period. Bears would have to brook the current outlook as the stock might inevitably go up. Mean reversion journeys in prices would only be identified as they are if they persist for about a few trading days as opposed to the overall trend. Transitions from bearish phases to bullish phases would be possible if the foregoing overextended trend on the upside occurred when a bearish trend is violated to the upside. It does not matter if this occurs as a result of the lower lows or while the intraday speculation is still extant.  

This article is ended with the quote below:

“The first thing I always look at is the chart. That is the most important thing.” - Stephen Temes

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Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

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