Technical analyst Clive Maund charts a small-cap
oil and gas firm exploring in Oklahoma's STACK region that recently released
positive drill results.
The situation in Jericho Oil Corp. (JCO:TSX.V; JROOF:OTC) stock has been
paradoxical in recent months, because the company has been advancing steadily
towards its objectives, and has even had very positive drilling results, right up to and including a
few days back, yet the stock has drifted lower and lower within a
downtrend. While this may seem puzzling to some, it is not something that
would surprise experienced traders. The explanation for this behavior is
thought to be that the stock has essentially been correcting the earlier big
upwave that ran from July last year through March this year, as we will
proceed to see a little later on its 3-year chart.
But first, let's take a look at recent action on the 6-month chart. On
this chart we can see after it peaked following a sharp run-up in March it
rolled into a downtrend that has continued up to the present. Signs that this
downtrend may now have run its course include its current oversold state
shown by its MACD indicator, volume having dropped back to a relatively light
level and the price now being well below its 200-day moving average. While
these factors indicate an increasing probability that the downtrend has run
its course, they do not give a clear cut indication regarding how close we
are to or whether we are at an intermediate bottom.
Happily the 3-year chart gives us a much clearer idea where we are with
respect to the stock possibly turning up again here or soon, for as we can
see, the current intermediate downtrend has now brought it back very close to
the lower support line of the large long-term expanding uptrend shown. So
this is a good point for it to turn up and the earlier break out the top of
the uptrend back in March is a sign that the uptrend may be accelerating, and
if it is it could turn up immediately, and the positive drilling results
released a few days back are increasing the probability of this happening. You can read something about the fundamentals of the company
here.
Another supporting factor is that oil looks set to turn up within its
ongoing uptrend soon, following its recent dip, and it is planned to add a
couple of oil charts to this article later, showing this.
Jericho Oil website.
Jericho Oil Corp, JCO.V, JROOF on OTC, trading at C$0.66, $0.504 at 10.45
am EDT on 2nd August 2018.
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