This AIM oil explorer should bounce here
27th September 2018 08:49
by Alistair Strang from Trends and Targets
This AIM-listed company's share price has experienced a volatile year. Alistair Strang's technical analysis examines recovery prospects.
Echo Energy (LSE:ECHO)
In case anyone hasn't guessed yet, we're working through the alphabet with our mid-week reports and the latest victim for analysis is Echo Energy.
To get the headline news out of the way, the price has experienced a gaga motion, a gap up and gap down which are circled on the chart.
Amongst FTSE 100s and 250s, we often regard this nonsense as proving a fairly reliable method to divine the markets intention.
Against AIMs, such a price dance steps can prove less reliable, due to the increased incidence of manipulation gaps.
In the case of Echo, if we choose to tar the price with a similar brush, it's probably going to bottom at 3.15p eventually.
There's a fairly high chance of a bounce at 5.3p which will, if broken, prove fairly short lived. This is the gaga effect in action, making any form of long position quite risky at present.
The price needs to close a session above 13p to foul up the argument for a drop, something not entirely unreasonable given it's currently trading at 11.5p.
What are the implications, if a miracle occurs and it closes above 13p?
We're looking for recovery to an initial 14.8p with secondary, if bettered, at 18p.
For now, we lack optimism! At least we avoided any puns about the name as everyone probably heard them a few seconds before…
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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