Third time lucky for BP as breakout attempt looms
In the past 16 months, it's had two goes at breaking above a downtrend that can be traced back to 2006. Now BP shares are getting close again. Independent analyst Alistair Strang studies the odds of it making a break stick on the third attempt.
25th April 2024 07:43
by Alistair Strang from Trends and Targets
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BP (LSE:BP.)'s share price appears to have discovered an invisible pause button, matching the share price highs prior to the 2020 pandemic reversals. This sort of thing is proving distressingly common, the stock market tending to regard these historic levels with an odd degree of reverence. Even the FTSE 100 itself, trapped in the pre-pandemic grip for a few years, is only now starting to signal hope for the longer term.
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In the case of BP, our inclination is to take closure above 580p as a pretty solid indicator that happy times are ahead.
Oddly, there seems to be an assumption that heightened tensions in the Middle East should cause runaway acceleration of BP’s share price but, in reality, when is there not a war somewhere in the world? Oil prices certainly seemed inclined to follow developments in the Middle East and, while elevated prices for crude oil usually are reflected in the price of energy shares, there is something truly odd with crude prices.
While they remain high, the type of movement is more reminiscent of something being artificially influenced rather reflecting actual market forces. This year, it feels like market forces are conspiring to keep Brent (for instance) in a holding pattern roughly between $80 and $90, no matter what our calculations say. Conventional logic would have Brent crude reversing quite sharply at present, but “the market” simply doesn’t want it to.
Currently, BP's share price needs to exceed 541p to give slight early hope, calculating with the potential of 555p and a very possible donk against the Blue downtrend which amazingly dates back to 2006. Closure above 555p will become crucial for the longer term, introducing a strong possibility of future movement to 658p and a brave new world for the oil giant's share value.
The converse scenario, examining the risks if everything goes wrong, proposes below 504p risks triggering reversals to an initial 471p with our secondary, if broken, a less likely 442p. We think this secondary is less likely, due to the presence of the Red uptrend and the care now being taken not to allow BP’s share price to drip below.
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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