Technicals | Apr 30 2014
Bottom Line 29/04/14
Daily Trend: Up
WeeklyTrend: Up
Monthly Trend: Up
Support levels: $8.40 / $7.76
Resistance level $9.08
Technical Discussion
Oil Search ((OSH)) is an oil and Gas Exploration Company with most of its assets based in Papua New Guinea. This is where it holds numerous oil and gas production and exploration licences. The company is involved in PNG’s producing oil and gas fields. The main asset is its 29% interest in the PNG LNG project which is a liquefied natural gas development operated by Exxon Mobil. For the fiscal year ending 31 December 2013 revenues increased 6% to $766.3M. Net income increased 17% to $205.7M. Dividend yield is only 0.5%.
Reasons to buy:
→ The PNG LNG project remains on schedule with first deliveries expected in mid-2014.
→ Hydrocarbon shows have been encountered at the Taza oil appraisal well in Kurdistan.
→ The company continues to break into new all-time high territory with the trend remaining strong.
Today's price action was very interesting with price gapping higher on open, breaking up through resistance intraday only to close near the lows of the session. However, it does mean that we don't have a gap to fill before another attempt at breaking up through resistance is seen. If today's high at $9.08 can be overcome there is plenty of blue sky ahead with no reason why the trend can’t continue unabated. Price action since 2007 has been choppy and messy although as long as higher highs and higher lows are seen we have to expect that strength will continue to be the main theme. It would take a break below $8.16 to suggest a longer pause for breath is going to take hold. As long as the broader market can hold itself together there is no reason why that level should come under pressure.
Trading Strategy
The strategy here is to buy following a break above today's high at $9.08 with the initial stop placed just beneath the line of resistance/new support at $8.72. With blue sky ahead there is no logical target area meaning we'll use a trailing stop to manage the position. If you want a little more confirmation that the breakout is going to stick wait until price closes above today's high before jumping on.
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