San Leon Energy stock (LSE:SLE) has experienced a
pullback in the context of an ongoing uptrend. In long-term bear
markets, there is always a bull market (or bull markets) somewhere, and San
Leon Energy is no exception. The current pullback may proffer bulls with a
‘buy’ signal, as the analysis below shows. When this occurs, the market would
smile at the bulls as it bares its fangs against bears. When this occurs, the
price would rally again as sellers are forced to evacuate their positions. Extreme
losses occur only when traders fall in love with a wrong market direction.
Technical Forecast
The
company shares price was trending down until June 18, 2012. After that, it rose
from a close of 7.32 (June 19) to a high of 13.00; a long way from that low.
Exponential Moving Average period 21(EMA) and Stochastic Oscillator are used
for this technical analysis. In June 2012, the price reached the EMA 21, tested
it several times, before breaking it successfully on June 28. The market closed
above the EMA and has been rising since then. The price was in equilibrium zone
from July 23 to August 7, as the EMA forestalled further bearish pressure. The
Stochastic reached an extremely overbought territory and has been retracing
lower since then. This explains why the market is currently in a pullback.
As
long as the price stays below the EMA (does not close below it), the current
northbound bias remains valid. When this article was being prepared, the price
was trading at 12. The levels that could prove a kind of difficult for the
bulls are 13.00 and 13.50 (resistance levels), while the support levels at
11.50 and 11.00 would attempt to safeguard the buyers’ interests. What is happening
at the moment is not abnormal, for the price does not journey in a straight
line. If the Stochastic falls to the oversold territory, i.e. below the level
20, the bulls and the bears would inevitably start trading blows as the price
struggles to find a new direction. Nonetheless, the price would have to rally
(unless it has closed below the EMA) - perhaps at a breakneck speed.
Conclusion: Considering the conditions
on the San Leon Energy stock, what is required of speculators is that they
should be ready when good entering opportunities beckon. Adaptability has no
limits. Obviously, secret purchases in a
northbound market is far more upwards than secret purchases in a southbound
market and shorting in a southbound market is far more downwards than shorting
in northbound market.
This
article is ended with the quote below:
“If you can catch
a fundamental trend, you can make a year's pay in a matter of weeks.”
- Joe
NB: You would be exposed to
world-class, cutting-edge, and top-notch trading experiences here: www.advfn.com
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
Copyright (C) ADVFN PLC
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