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Gulf Keystone heading to 14 pence. Oh, please, behave!

Last updated: 07:00 24 Sep 2016 BST, First published: 11:00 23 Sep 2016 BST

Gulf Keystone heading to 14 pence. Oh, please, behave!

Sometimes a share has done everything except advertise in the FT that its price is going to go up – and yet it will point blank refuse to perform.

When I see this happen I invariably conclude: if it isn’t going up, then it must be going down. I then look for a drop trigger.

It's quite alarming the number of times this attitude bears fruit.

Thankfully, the converse is equally true. In the case of Gulf Keystone (LON:GKP) it's trading in a zone where all drop targets really should be prefaced with a minus sign.

We've been calculating recently that should it drip below 1.8p, any fall might stop at 1.4p or it could equally go to 0.4p.

But the interesting thing is, the price has not gone down. So let’s use that reverse psychology I spoke of and look for reasons to be cheerful instead.

In the last week, something quite interesting happened from my perspective.

I'd been looking at a potential downtrend since 2014 and suspected it could prove important.

This was the trend which formed following the killer movement in March 2014 when the market decided it was open season on GKP investors, trashing the share from 144p to 102p in a single day.

The confusing Tuesday this week, when GKP moved from 2.06p to 2.34p, appeared to be due to the price moving through a downtrend, which dates back to a period when the share was over a quid.

It means any positive news or market conditions are now liable to exert quite strong upward force against Gulf Keystone.

To inject some reality into the conversation, anything now above 2.5p looks like it should drive a near term 3.3p with secondary, if bettered, at 4.15p.

It's the secondary ambition which really interests me as this would prove capable of launching Gulf Keystone into a region where a long-term aspiration calculates as being a silly sounding 14p.

Silly, aside from the visuals on the chart where such an ambition really does not look foolish.

On the graph above, I've circled the Tuesday movement and can only hope this proved the downtrend I'd been watching was valid.

The alternate reality remains extremely unpleasant. All big picture drop targets against this share are prefaced with a minus sign.

From viewing the force of the downtrend since 2014, I'd need this above 40p to signal a glass ceiling has broken and some proper recovery can commence.

Good luck.

Alistair Strang is the founder of www.trendsandtargets.com 

 

 

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