SDX Energy: Price channel target towards 70p

Over the years I have shifted somewhat from the technical analysis only approach – if only on the basis that there are hardly any companies I do not interview – and on Twitter one is bombarded by the fundamental argument for many a minnow.

SDX Energy (LON:SDX) ticks all the boxes that one would be looking for in a speculative exploration situation, with the idea of course being that there is plenty in place to make it as non-speculative as possible. Having interviewed CEO Paul Welch, it can be said that he is someone who has clearly been around the block and is a safe pair of hands.


In terms of the market sentiment towards the company, one can say from the Twitterati and beyond that people who normally know what they are talking about back this company. And perhaps just as important, newsflow at the group appears to be first rate. This is particularly so with reference to the $30m acquisition of Circle Oil’s assets, which will see production rise by 250% and add $21m to annual cashflow.

From a technical perspective all this manifests itself in the form of a clean rising trend channel in place on the daily chart since the beginning of October. The floor of the channel currently runs at 45p, with the message being that this zone is probably the area to buy any dips down to. Indeed, only an end of day close back below the 50 day moving average at 37p would really delay the prospect of a 2-3 month timeframe target as high as 70p at the 2016 price channel top.