Tullow Oil plc : Enclosed in a bearish trading channel
By Camille Chretien
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 1,021 | GBX 977 | GBX 1,033 | +4.31% |
The security is overvalued with a P/E ratio of 26.7x for 2013 (sector : 16.4x). Further, analysts regularly and largely revised downward their EPS estimates (more than -30% since the beginning of the year).
The stock is stuck within a bearish trading channel. The upper limit of the latter, combined with the 100-day moving average enclose it in a very negative trend. We expect prices to decrease towards the lower limit of the trading channel around GBp 900, but we will target firstly the GBp 977 medium-term support.
Thus, a short position can be opened just below the GBp 1019 short term support in order to reach the next threshold at GBp 977. A stop loss must be placed above the effective entry point.