This AIM share is close to a dramatic chart breakout

Serica Energy (LSE:SQZ)

Every now and then we’re asked to comment on a share paying ridiculous attention to a long term downtrend. Serica (SQZ) is one such with the blue line on the chart actually starting in August 2006. Sometimes, these things can be as valid as glass ceilings to point at viable growth.

In the case of Serica, it appears closure above blue shall prove critical. Our trend tool advises the price needs to end a day with a mid-price above 92.112p to currently better the trend. This should dictate the share as being in a position for 110p as the initial breakout target with secondary, if (when) bettered, a rather more useful 146p.

Unfortunately, there are indications the market is trying to avoid such optimistic calamity. Currently trading around 72p, the visuals indicate any near term weakness below 68p should find a hopefully bouncy bottom at 62.75p. We’d hate seeing the share below 62.75p as it risks a visit to 51p, along with the threat of any future promise taking an age to appear. Our reasoning for a dose of misery at 51p is fairly simple. Once a price starts trading below a prior “low”, the odds are of folk assuming an attempt is coming to “cover the gap” and in this case the demand will be for weakness to 28p.

There’s a funny little problem. The lowest we can calculate currently is 31.5p. Hopefully 62.75p indeed presents a bounce on the immediate cycle as it avoids us attempting complex calculations!

Source: interactive investor         Past performance is not a guide to future performance

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.

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