By Zak Mir.
As I wrote earlier in the week, the price of crude (Brent and WTI) is back on the move in a positive way. This gives me a good excuse to revisit the charting position of three FTSE350 Oil & Gas plays; Tullow Oil (TLW), BG Group (BG) & Cairn Energy (CNE). Each of these is usually subject to M&A speculation at one time or another.
Starting first with TLW, were it not for the bid whispers earlier in the week, I might not be too enthused by this chart:
The reason for my lack of excitement is that there is a clear descending price channel on the daily timeframe. It seems likely, at the moment, that there will be an attempt to bounce off the red mid-channel support from May, which nominally coincides with the present 10MA at 870p. The presence of this gives a comfortable end of day stop loss level, as we look to a recovery attempt in this stock. The target upside, with or without any M&A developments, is the 50MA at 937p at a minimum. The best upside on offer is likely to be at the top of April’s price channel at 980p, over the next two to four weeks.
While TLW has been the subject of most recent takeover speculation, the company in the FTSE100 which really should have succumbed in this respect remains BG Group (BG):
This is especially true, since the company undermined its fundamentals last autumn with a production warning. Frankly, the stock has not been the same since. This point is underlined by the recent charting position, which shows a clear three steps up, two steps down progression, since the spring. Nevertheless, the apparent reticence of the bulls to get fully involved with this stock has not stopped a developing rising trend channel since April, which is backed by an April uptrend line in the RSI window and the latest bounce off the 40 mark. As long as there is no end of day close back below the 200MA at 1,187p, the upside on offer is the top of the 2013 price channel at 1,350p plus, over the next one to two months.
Finally, this brings me to CNE:
The easiest thing to say about the Greenland focussed explorer is that the huffing and puffing over recent months has led to range bound trading. This has nominally been within the 250p to 300p range. However, there is also a rising trend channel in placed, with a floor currently at 269p. This provides a relatively tight end of day stop loss level, as we look to a fresh leg to the upside. The 6 month resistance line projection target is 295p. Indeed, it may be that cautious traders go for this target only if there is a decent close about the 200MA at 274p later today. This could happen within a month.