Tullow Oil should have a new bearish trend in the coming trading sessions.

The rebound recorded in the last trading sessions is not justified by Tullow Oil’s fundamentals which are still fragile. Indeed, the company is highly valued: analysts estimate it has a 24.8x P/E ratio and a 6x EV/Sales ratio for this year. Finally, the Thomson Reuters consensus has recently revised downward EPS estimates. It is often an indicator of the coming decline in profitability.

From a technical viewpoint, the security is in a bearish trend in the long and mid-term, even if prices have increased in the short term. The current technical rebound allows the stock to be close to its GBp 1112 resistance. Despite the breakout of 20-day moving average, prices should decrease soon because of the bearish trend in the long term and the bad-orientation of the 50-day moving average.

Investors can anticipate a return toward support area in the coming trading sessions. They can take a short position in Tullow Oil. The target price is fixed on the mid-term support at GBp 1048. A stop loss order could be placed above the GBp 1112 resistance area.