Magnolia Petroleum (MAGP): Initial 200 Day Moving Average / Trendline Support

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Magnolia Petroleum (LSE:MAGP): 2011 Uptrend Line

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Given that Magnolia Petroleum is one of the most followed speculative situations on the UK stock market, I am aware that I have to choose my words carefully. The big plus points currently are the way that at 2.8p the shares have come back to test not only the 200 day moving average – major uptrend support – as well as a line of support on the daily chart from December 2011. What can be said now is that while there is no weekly close back below this double support zone (allow down to say 2.5p) one would expect the shares to retrace part or even all of the sell off seen since the 5p plus heights of October / November. All of this is pretty straightforward.

However, those who are cautious on Magnolia may wish to wait on the shares closing back below the top of an unfilled gap to the downside from earlier this month at 3.30p. This may seem to be a long way up, but given that such gaps can signal the start of an extended bear phase, holding back until the gap is filled could ensure one is not simply there to catch a falling knife, albeit a very popular one.

You can read more analysis on Magnolia Petroleum in Zak’s Amazon eBook bestseller, Lessons From The Financial Markets For 2013 by clicking here


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