Is the oil sector facing more weakness?

As the bumpy ride for oil continues, our chartist struggles to find too much cause for optimism.

Oil and the Oil Sector

We constantly remind readers we're not gifted with time travel.  When "the computer" makes a price projection, the stupid box is completely unable to pull a Dr Who stunt and give a timeframe.

It's a bit like predicting a Brexit date - not possible other than knowing it will happen.

Probably! As a result, the safest thing we can suggest is not getting excited about a share being "cheap" if a ruling sector trend suggests downward travel.

The oil sector is presently in a slightly scary place with some truly foul potentials.

As a result, oil shares doubtless face a bumpy ride if the sector wanders below 8,214 points.

We'd regard this as the trigger for reversal to a harmless looking 7,985 and hopefully some sort of bounce. Alas, we'd suspect any bounce shall prove short lived - especially if the initial surge down breaks our 7,985 target level.

The implication of a break will signal the risk of continued weakness down to 6,230 points, perhaps even a bottom at 4,749 as the "ultimate" point at which a proper rebound can be hoped. This, unfortunately, even makes some visual sense.

We're not optimistic about the sector's chances but near-term, there is potentially the opportunity to map sector strength.

Above 8,485 points calculates with an initial potential of 8,624 with secondary, if exceeded, coming along at 8,801 points. This will at least challenge the most recent uptrend and allow a longer-term 9,154 points along with confirmation the entire sector is "rangebound" for the present.

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.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.