There is a bearish signal on
New World Oil and Gas (LSE:NEW) as explained below. This means that the
caparisoned bears have left the bulls in utter discomfiture. As a speculator we
would do well to bet on what the price is doing.
Technical Forecast
In some cases, there
could be irrationality in the market. As the chart shows, the price movement on
the market has been so erratic and volatile for a long period of time. Bullish
attempts have often been abortive, and bears have refused to capitulate. For
this analysis, the Average Directional Movement Index (ADX) period 14 and the
Moving Average Divergence Convergence (MACD) default parameters are used. The
ADX line is at the level 30 as its DM- (red) is above the DM+ (green) counterpart.
This shows a bearish pressure. It also means that once the ADX line leaves the
level 30 and points upwards, the bearish strength would even be renewed. The
signals lines and the histogram of the MACD are now below the zero line. This
is a SELL signal.
The price was trading at
9.375 when this article was being prepared. Immediate distribution levels are
10.000 and 10.500, whereas the accumulation levels at 8.500 and 8.000 are excepted
to be breached soon. This is the same scenario that allows a short-seller to
ride a seemingly high price lower and eventually become a winner. Traders
merely need to stop going against the flow of the markets. It is understood
that the past risk is what is now present profit and we are sure that the
positions we open are determined carefully with sensible entry and exit levels
in advance.
Conclusion: Contrary to the wish of
some, the New World Oil and Gas shares could go down lower. The market
participants continue to leave their traces on historical data. For us to understand
this more, we must not forget that gurus would prefer to go short when the
masses think it is safe to purchase: they purchase when the masses think it is
safe to go south. Neophytes take positions that are contrary to gurus.
Neophytes go long when some have long been bullish and gotten rewarded (with
the process reversed when neophytes go short); as experts are ready to go
contrary to them. Perhaps they are not aware that when the market is extremely
bullish or bearish, a remarkable correction could take place, which could
result in a good entry price. No one will commend us for riding losing orders.
This article is ended with the quote below:
“You have reached the pinnacle of success as long as you
become uninterested in money, compliments, or publicity.” – Dr. O.
A. Battista
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
For more articles, go to: http://www.advfn.com/newspaper/authors/azeez-mustapha
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