It would appear that the optimists are back in charge as far as Petrofac (LON:PFC) is concerned. The question now is whether or not this can last…
Although it is difficult to be entirely precise when a stock or market is under the influence of controversial newsflow, it was possible to suggest that below 380p shares of Petrofac looked as though they were in implosion mode. However, the May low of 376p only lasted a couple of weeks.
Combined with the latest gap to the upside we have an island reversal formation, one of the strongest bullish setups in the charting armoury. On this basis one would suggest there could be a push back towards the top of the last gap down for the shares with the implied target as high as 600p. This could be hit as soon as the next 2-4 weeks, given the momentum implied by the island reversal.
However, given that the Serious Fraud Office have been knocking on the door here, it may be wise to enforce stop losses on any positions, perhaps even of a guaranteed nature. To this end one would suggest that one need risk no lower than 412.5p, the intraday low of the day so far. At the same time any minor dips down to this zone can be regarded as buying opportunities.