Is outburst of optimism around Gulf Keystone justified?

Gulf Keystone (LSE:GKP)

Our lack of trust for Gulf Keystone (GKP) is well documented, but recent price movements raise some questions. We’re in the somewhat silly position of speculating something might happen, ‘cos something really bad hasn’t happened (yet). And the computer says…

This is almost embarrassing as our software suggests, should GKP’s mid-price appear at 92.75p, it’s apparently presenting an entry point to catch some sort of bounce.

Making the prospect even more attractive is a hint of a stop-loss level being at 89.5p due to the issue of below entering a pretty dangerous drop cycle. There are even indications the share price must experience some sort of movement within the next couple of sessions.

We asked the computer how high the price would bounce. Typically, it said nothing. Probably due to the speakers being off and the microphone disconnected. So instead, we applied common sense and drew a few lines.

Joking aside, the level of any bounce from a calculated bottom is generally a complete sod to extrapolate, but we find drawing obvious trend lines will give levels where traders are liable to bail a trade and, thus, give simple target prices. If, of course, the bottom ambition does invoke a bounce.

For GKP, the implication is the potential of movement to 103.5p currently, a point where near-term traders armed with a solid blue pen are very liable to take profits, and, thus, generate selling pressure to stifle a rise.

The secondary – for traders armed with a dashed blue trend pen – if such a point is bettered, comes in at 126p currently. And the big daddy is shown discretely at 128p. If GKP closes above such a point, buy some and go away for a while as good stuff looks hard to restrain!

We’d be remiss if we didn’t pour some misery on this outburst of optimism. We’ve two flies competing for ointment currently.

1. Realistically, we’ve issues below 89.5p as the price risks entering a cycle to 74p as best guess. Secondary, should such break, is 52p.

2. During this year, we’ve learned to treat gaps with impunity as the concept of “filling a gap” appears absent from the 2017 marketplace. The detail of GKP presenting a manipulation gap from 93.25p means we should not expect a bounce… But it’s GKP, so it might!

 

Alistair Strang has led high-profile and “top secret” software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know “how it worked” with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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