Medium term
Trade view / 28 July 2016 at 8:57 GMT

Bulls' last stand in Lundin Petroleum


The bearish Trade View presented on July 8 concerning Swedish oil company Lundin Petroleum (LUPE:xome) has worked out about right, even though we aren't at the projected targets yet. It could be of interest to flip the position/stance into a bullish one, because if oil stocks have turned, longer term, this is an opportunity.

Since the peak set on June 9 following the swing higher off the January lows, we now have an Elliott wave flat structure: three waves down, three waves up, and five waves down off the peak set on July 13. If the market is bullish, there is a good chance that the last five-wave swing lower will be a short one.

Time cycles suggest that today, July 28, is important, as cycles align in time for a complete structure. We should at least be able to get a bounce from here, and the possibility to raise a stop in the not-too-distant future.

Looking at pivot levels of interest, we have the SEK 139 level as key support. A close below this line would indicate more downside. To the upside, we have resistance at SEK 145, SEK 151 and SEK 157. A future break above SEK 157 would be quite bullish, but for now, we are playing a bounce into this level.

The oscillators are pressured to the downside, and the Slow stochastic indicator (STOC-S) is at levels from where it could reverse. The Relative strength indicator (RSI) has more room to run to the downside, but if the tape is bullish, this reading doesn't necessarily have to come all the way down.

Management and risk description

The plan is to buy LUPE:xome above SEK 139, for a move higher into resistance at SEK 151 and SEK 157 in the coming weeks. The stop is a daily close below SEK 139.

The risk to this setup is a failed bounce and a break of SEK 139. If this were to happen, we might revisit the SEK 100 level.

The most recent Trade View on Lundin Petroleum, which was bearish, can be found here.


Entry: buy above SEK 139.

Stop: daily close below SEK 139.

Target: SEK 151 and SEK 157.

Time horizon: about two weeks.

LUPE:xome daily chart
LUPE:xome daily chart
 Source: SaxoTrader

LUPE:xome daily development chart
LUPE:xome daily development chart
 Source: SaxoTrader

— Edited by D. Deacon

Non-independent investment research disclaimer applies. Read more
02 August
Johan Berntorp Johan Berntorp
So far the SEK 139 levels is holding up, but we are weary of a close below SEK 139. More downside now would be troublesome as the bullish cycle interpretation would fail.
03 August
Johan Berntorp Johan Berntorp
It appears as though this stock is heading lower still. I am stopped out with loss.
04 August
Johan Berntorp Johan Berntorp
The day after I pulled the plug the stock rallied substantially following the earnings release. Conflict in signals here, time cycles missed, we closed below SEK 137 but the wave pattern is still there...


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