- I must confess that I was taken slightly by surprise by the UT at 40p today, having expected a close in the low 39p region after a bounce off of the 38p support level, but this was a nice and bullish way to end the day nevertheless.
- This close at 40p confirmed the bullish rising trend line I have previously discussed from the base level support at 35.5p, which can be seen in the graph below.
- This basically is playing out in a gently bullish way now, with no huge swings caused by herds of traders moving in and out - everything below still applies in case anyone is interested and as we begin to gather more momentum I wouldn't be surprised if this trend line become parabolic.
UPDATE (27/04/2015):
- We had a great day today, closing above the 50 day SMA that had previously been at 40.38p as of Friday's closing bell. This confirmed the bullish set up and volatility funnel described in the previous analyses.
- This means that technically, the next resistance points are at the 45p and 49.75p and with the 20 day SMA being only 1.5/2.0p off of the 50 day SMA these seem like they'll be less difficult to break than the chart perhaps suggests.
- A break through the 100 day SMA at 49.33p would give us technical targets of 60.49p (the 200 day SMA), 61.5p, 68.75p, 75p and 80p, which are the next major resistance levels.
- Support can now be found at 40p, 39p, 37.50p, 35p and 33.50p - an added benefit to those thinking of going long who worry about their downside support levels on trades (as we all should).
- I am yet to decide on my exit point, but I will make it available to see via my twitter account.
All the best,
The Masked Stock Trader
UPDATE (23/04/2015):
- I felt that it was worth adding that even as we are still under the 40p level, as long as we don't fall below the 33.5p support line, this is positive for the impending move towards breaking the 50 day SMA and ploughing through the 40p level.
- This is all down to the simple maths of "if you add something to an average that's less than the value of the average, said average will fall in value" - meaning that while we continue to close above 33.5p and below 40p the 50 day SMA is falling with us and will begin to encroach on previously broken resistances - i.e. it becomes easier to break through this 50 day SMA.
- Added to this, I also feel that the higher than normal volumes we're seeing over on the OTC markets in the USA are a leading indicator for news to come over in the UK regarding GKP.
I have no licence to give financial advice, so don't use this information as such advice, etc.
Having closed my long position in Westminster Group for 7.6% worth of upside, I have moved into Gulf Keystone Petroleum for another technical trade:
- I like the base that seems to have formed over the last three months at the 33.5p on the closing prices of the chart and this is the level where I will reconsider the trade or take the trade as being invalidated and look to exit.
- This triple bottom at 35.5p has helped to create a volatility funnel between the short (10 and 20 day SMAs) and longer term moving averages (50 and 100 day SMAs). This tightening of the prices with a clear floor on the chart suggests that there's significant upside once the 50 day SMA has been breeched and held.
- Based on this funnelling effect, a break of the 50 day SMA at 40.91p could allow for a resistance free ride towards the 100 day SMA at 50.72p and a breech of this would lead us to target the February highs at the 60p level.
- In the case of recovery plays like GKP, the fact that they have been in a long term down trend for many years ironically reduces the sustained long term short risk on the stock (shorting a stock that has fallen 92% from its highs would be seen as a negative asymmetric trade - you are risking more points of downside than upside).
- I also like the way in which the base at 35.5p is beginning to create a bowl shape on the chart, with the 20 day SMA beginning to uptrend along with the 10 day SMA and the price action, which to me indicates that the fundamental position is either beginning to improve or is at least being recognised in a more bullish light.
All the best,
The Masked Stock Trader
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