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There is a bearish signal on New World Oil and Gas (LSE:NEW) as explained below. This means that the caparisoned bears have left the bulls in utter discomfiture. As a speculator we would do well to bet on what the price is doing.
Technical Forecast
In some cases, there could be irrationality in the market. As the chart shows, the price movement on the market has been so erratic and volatile for a long period of time. Bullish attempts have often been abortive, and bears have refused to capitulate. For this analysis, the Average Directional Movement Index (ADX) period 14 and the Moving Average Divergence Convergence (MACD) default parameters are used. The ADX line is at the level 30 as its DM- (red) is above the DM+ (green) counterpart. This shows a bearish pressure. It also means that once the ADX line leaves the level 30 and points upwards, the bearish strength would even be renewed. The signals lines and the histogram of the MACD are now below the zero line. The indicators have formed what is known as a Divergence Pattern – a bearish confirmation. This is a SELL signal.
The price was trading at 9.375 when this article was being prepared. Immediate distribution levels are 10.000 and 10.500, whereas the accumulation levels at 8.500 and 8.000 are excepted to be breached soon. This is the same scenario that allows a short-seller to ride a seemingly high price lower and eventually become a winner. Traders merely need to stop going against the flow of the markets. It is understood that the past risk is what is now present profit and we are sure that the positions we open are determined carefully with sensible entry and exit levels in advance.
Conclusion: Contrary to the wish of some, the New World Oil and Gas shares could go down lower. The market participants continue to leave their traces on historical data. For us to understand this more, we must not forget that gurus would prefer to go short when the masses think it is safe to purchase: they purchase when the masses think it is safe to go south. Neophytes take positions that are contrary to gurus. Neophytes go long when some have long been bullish and gotten rewarded (with the process reversed when neophytes go short); as experts are ready to go contrary to them. Perhaps they are not aware that when the market is extremely bullish or bearish, a remarkable correction could take place, which could result in a good entry price. No one will commend us for riding losing orders.
This article is ended with the quote below:
“You have reached the pinnacle of success as long as you become uninterested in money, compliments, or publicity.” – Dr. O. A. Battista
Oops- going up!
TA is pointless on this company, the share price is news driven.
Don’t give up your day job!