GKP

This may sound like a silly question, when do you declare support broken?

Say 87p, is it the minute the price falls below that point? is it when it closes a day below that point? It's around 84.5p right now, if it rose from here back to 90p today and closed at 91p, would you still say 87p was broken, or would it be a test of the support and found to be supported?

Hi Guys, First post here however been a sniper for quite some time.

Jacko, Looks like the largest red candle seen since the drop from 360. Remo was right to point out NOT to go long should we get to 87p again surprised how easy it dropped through it though. What's peeps views of 64 holding or is it more realistic that the gap close by at 52.75 will be the obvious target?

Also, thanks to demo and ronnie for some premium tips, My RBS and IMG are doing ok. Now looking to take profit Mmmmm?

nerone
aka mrg

Bit of a grey area MfB, but generally speaking the most important price of the day is the closing one.

The fact that this has returned to, and gone below on an intraday basis (twice now), 87p is not a good sign IMHO. There are no buy signals on this stock that I can see so I would not buy this until the 64/7p area now and even then I'd have pretty tight stops.

Thanks Jackozy, I didn't know if we would declare support broken, or just use a thicker line on the chart and say it supported! hehe

I went long at 88 with a 10 point stop, in theory the stop should be tight, but it's with a spread bet co and I know the fluctations are exaggerated, so its tight'ish.

I would be ready to do the same at 64-67p

Buying the dips ..... reasonable plan?

"Buying the dips ..... reasonable plan?"

During an uptrend, yes. During a downtrend that's a certain route to financial ruin unless you stick only to main support levels and then have strict money management (ie get out at resistance if it bounces and/or move stops to break even asap).

Best to wait for a bottom to form and then trade the breakout on a 123-low basis.

A TA post from the prophets if doom (Shareprophets) that clears the way to that gap at 52p -

Gulf Keystone: Unless positive news emerges, the stock is doomed
BY THIERRY LADUGUIE — MONDAY 31 MARCH 2014

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.



Looking at the long term (weekly) chart for Gulf Keystone Petroleum (GKP) and it is clear this stock is in some trouble. The breakout below 144p has very negative consequences in the long term. The long term support line (blue dotted line on my chart) was broken on 13th March. This line can be seen as the neckline of a head and shoulders pattern [S1,H,S2] which is a bearish pattern.

It’s bearish because the neckline is broken, the stock should continue to decline until it gets to the next support area near 50p. This target is calculated by projecting the percentage decline from the top to the neckline. I am projecting a 75% decline from the moment the neckline was broken, at the time the price was trading at 144p. In theory the stock could fall to 36p, a fair target in the long term is 50p.

I believe that this decline will materialise in the long term but in the short term there is a risk the stock will bounce back to the 125p area. Why? Because on the weekly chart the stock is at the bottom of a regression trend channel, which is a support area. After the sharp move down seen in March the stock has become oversold and the lower line of the channel is acting as support.

Let’s take a look at the daily chart:



The oversold condition is identified by the blue line of the Directional Movement index at the bottom of the daily chart. The stock is oversold when the blue line falls below 10. Right now the line is below 10 and, looking back at past patterns, drops below 10 have generally been followed by counter trend rallies, so there is potential for a bounce in the short term.

However, trading this bounce is not recommended.

I have seen many example of stocks in trouble and in this situation the decline can continue while the stock remains oversold. We must remember that the trend is down here, the stock may or may not bounce, but if it bounces the most likely target is 120p. The strategy here is to use the bounce to short more. If the trend has turned down as I believe, the decline will be in five waves [1,2,3,4,5]. Assuming the lowest level so far is the bottom of wave 3, the oncoming bounce to 120p will be wave 4 and the decline to 50p will be wave 5.

- See more at: www.shareprophets.advfn.com/views/4732/g...sthash.X5l4KdFT.dpuf