Tide Rising For Beach

This story features BEACH ENERGY LIMITED. For more info SHARE ANALYSIS: BPT

Bottom Line 13/03/14

Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up

Technical Discussion

Beach Energy ((BPT)) had just broken up through a zone of resistance during our last review which set the stage for a sideways consolidation before the trend resumed.  We actually didn’t see much in the way of a pause with buyers remaining quite happy to chase price higher.  This now provides us with a little leeway in regard to seeing short term weakness though whether it transpires we’ll just have to wait and see.  A small pull-back at this stage of the trend wouldn’t be overly alarming as long as old resistance/new support remains intact.  It’s very important that the $1.55 area isn’t overcome as it would put us back to a neutral stance and take away from the strong leg higher that kicked into gear in late December last year.  Right here and now though the bullish case remains firmly intact although there is a solid zone of resistance just beneath the $1.80 region that needs to be respected.  Those slightly higher levels have been tagged several times over the years, the first one going back to 2006.  So it is significant and we can’t quite count our chickens yet in regard to achieving all-time highs despite it being the ideal situation and offering plenty of blue sky.

We have now seen a very strong extended leg higher into the recent pivot high which could well complete minor degree wave-iii.  It is feasible that the recent correction has run its course though there are a couple of things to take a look at.  The first is the time taken by the retracement from the high of wave-iii which is lacking somewhat.  In normal circumstances we expect wave-iv to be a more convoluted pattern, perhaps unfolding as a flat or a triangle.  Then there’s the guideline of alternation which states that the two corrective moves should be completely different in nature. And as can be seen here they are almost identical meaning the door is open to see a little more posturing in this general region.  The other interesting pattern is Type-A bearish divergence as price recently made a higher high with our oscillator failing to confirm by making a lower high.  It’s also triggered and although that doesn’t necessarily mean a deeper retracement it usually results in the prior pivot high not being overcome until our oscillator unwinds into the oversold position.  Just a couple of reasons to be little cautious over the short term although it doesn’t detract from the upside potential that remains.  We’ll discuss those higher targets below.

Trading Strategy

Generally speaking wave-(iii) will extend which means the current rally should take us up to the target area around $1.85.  There could be another pause for breath at those higher levels though ultimately the initial target should be overcome.  The other pattern we’ve been watching closely over recent reviews is the large triangle which commenced back in March 2012 with the upper boundary only recently being overcome.  In projecting a target area we simply measure the widest part of the triangle and project it from the breakout which provides a target of around $2.20.  For now though there is no reason to be looking for an entry though once the bearish divergence unwinds that’s exactly what we’ll be doing.  For the moment we’ll remain patient a little longer.
 

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

Risk Disclosure Statement

THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.

Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms