Gulf Keystone: is there a game-changing recovery in sight?
It's been a tough year for the oil firm. Our chartist sees if they can escape further falls.
22nd September 2020 08:50
by Alistair Strang from Trends and Targets
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It's been a tough year for the oil firm and the wider industry. Our chartist sees if they can escape further falls.
Gulf Keystone (LSE:GKP)
Like many in the oil industry, Gulf Keystone Petroleum (LSE:GKP) have not had a good pandemic. We fear things are about to get worse for the share price, trading around 71p at time of writing.
Or, to be fair, 0.71p, thanks to a 100:1 share split back in 2016 with a movement which completely failed its attempt to make the share price sound more respectable!
The immediate situation is fairly brutal, with weakness below 70p calculating with the potential of reversals to an initial 60p.
It's at this price level where things get quite scary, even more alarming than the criticism which (used) to be received from the gang who used to "talk up" Gulf Keystone’s share price in internet chat rooms.
Disagreeing with their narrative would generate complaints, threats of boycotts, letters to editors, and some fantasy conspiracy theories.
Thankfully, this group appears to have emigrated to pastures new, hopefully learning the lesson that gravity exists regardless of their opinions.
Unfortunately, their enthusiastic support for a failing share price doubtless has trapped substantial numbers of naive investors.
Our concern around the 60p level comes should the price close below this level.
In such a case we have two quite distinct scenarios, with each providing exactly the same ‘bottom’ target for this share price.
When this sort of thing happens, we tend pay quite a lot of attention as the drop target tends to prove correct, ideally along with a rebound when the target is achieved.
In the case of GKP, closure below this level works out with a bottom potential at 25p, a price level which should prove useful to those awaiting the worst.
At present, Gulf Keystone needs to exceed 81p simply to exceed the downtrend formed since the coronavirus dip in March of this year.
Such a miracle calculates with an initial recovery target at 90p with secondary, if exceeded, a visually pleasing 98p.
This challenges the highs since Covid-19 hit but more importantly, also takes the price above a downtrend which dates back 4 years.
Closure above 98p shall, we feel, prove game changing for GKP's recovery prospects.
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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