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San Leon Energy stock (LSE:SLE) has experienced a pullback in the context of an ongoing uptrend. In long-term bear markets, there is always a bull market (or bull markets) somewhere, and San Leon Energy is no exception. The current pullback may proffer bulls with a ‘buy’ signal, as the analysis below shows. When this occurs, the market would smile at the bulls as it bares its fangs against bears. When this occurs, the price would rally again as sellers are forced to evacuate their positions. Extreme losses occur only when traders fall in love with a wrong market direction.
Technical Forecast
The company shares price was trending down until June 18, 2012. After that, it rose from a close of 7.32 (June 19) to a high of 13.00; a long way from that low. Exponential Moving Average period 21(EMA) and Stochastic Oscillator are used for this technical analysis. In June 2012, the price reached the EMA 21, tested it several times, before breaking it successfully on June 28. The market closed above the EMA and has been rising since then. The price was in equilibrium zone from July 23 to August 7, as the EMA forestalled further bearish pressure. The Stochastic reached an extremely overbought territory and has been retracing lower since then. This explains why the market is currently in a pullback.
As long as the price stays below the EMA (does not close below it), the current northbound bias remains valid. When this article was being prepared, the price was trading at 12. The levels that could prove a kind of difficult for the bulls are 13.00 and 13.50 (resistance levels), while the support levels at 11.50 and 11.00 would attempt to safeguard the buyers’ interests. What is happening at the moment is not abnormal, for the price does not journey in a straight line. If the Stochastic falls to the oversold territory, i.e. below the level 20, the bulls and the bears would inevitably start trading blows as the price struggles to find a new direction. Nonetheless, the price would have to rally as the Stochastic begins to head up from that territory (unless it has closed below the EMA) – perhaps at a breakneck speed.
Conclusion: Considering the conditions on the San Leon Energy stock, what is required of speculators is that they should be ready when good entering opportunities beckon. Adaptability has no limits. Obviously, secret purchases in a northbound market is far more upwards than secret purchases in a southbound market and shorting in a southbound market is far more downwards than shorting in northbound market.
This article is ended with the quote below:
“If you can catch a fundamental trend, you can make a year’s pay in a matter of weeks.” – Joe Ross
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