Medium term
Trade view / 08 July 2016 at 7:33 GMT

Medium-term swing setup in Lundin Petroleum

The stock of Swedish oil company Lundin Petroleum (LUPE:xome) peaked on June 9, following an upward trajectory since a low set in mid-January this year. As it is quite possible the five wave swing higher off those lows ended a larger cycle that started mid-December 2014, this stock could be worth a shot for a swing short towards outlined levels of support.

The price action off the June 9 peak implies an end to the cycle higher off the January lows, and the correction has not taken enough time so far for us to suspect it has come to an end. We are therefore expecting lower prices still, at least for some time to come.

A first move lower took this stock down to the SEK 139 pivot, and we would expect this level to be revisited. From then on, we have support at SEK 133 and SEK 127. 

Resistance is found at SEK 157 and SEK 163. A daily close above SEK 163 would be quite bullish, but obviously we aren't there yet.

Management and risk description
The plan is to sell this stock upon a daily close below SEK 151, with a stop upon a daily close above SEK 157 and targets of SEK 139, SEK 133 and SEK 127.

The risk to this setup is mainly higher oil prices. The company report earnings on August 3.


Entry: sell a daily close below SEK 151.

Stop: close above SEK 157.

Target: SEK 139, SEK 133 and SEK 127.

Time horizon: 1 month.

LUPE:xome daily chart
LUPE:xome daily chart

LUPE:xome daily development chart
LUPE:xome daily development chart
Source: Saxo Trader

— Edited by D. Deacon

Non-independent investment research disclaimer applies. Read more
08 July
Johan Berntorp Johan Berntorp
No trigger here today, but from where we are now it is fine for it to trigger next week as well.
18 July
Johan Berntorp Johan Berntorp
As things stand for LUPE:xome a daily close below SEK 151 is still valid for selling short.
28 July
Johan Berntorp Johan Berntorp
Risk/reward and time cycles suggest one can close this one out. Tape might actually be quite bullish from here on given recent developments.


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