The situation in Jericho Oil Corp. (JCO:TSX.V; JROOF:OTC) stock has been paradoxical in recent months, because the company has been advancing steadily towards its objectives, and has even had very positive drilling results, right up to and including a few days back, yet the stock has drifted lower and lower within a downtrend. While this may seem puzzling to some, it is not something that would surprise experienced traders. The explanation for this behavior is thought to be that the stock has essentially been correcting the earlier big upwave that ran from July last year through March this year, as we will proceed to see a little later on its 3-year chart.
But first, let's take a look at recent action on the 6-month chart. On this chart we can see after it peaked following a sharp run-up in March it rolled into a downtrend that has continued up to the present. Signs that this downtrend may now have run its course include its current oversold state shown by its MACD indicator, volume having dropped back to a relatively light level and the price now being well below its 200-day moving average. While these factors indicate an increasing probability that the downtrend has run its course, they do not give a clear cut indication regarding how close we are to or whether we are at an intermediate bottom.
Happily the 3-year chart gives us a much clearer idea where we are with respect to the stock possibly turning up again here or soon, for as we can see, the current intermediate downtrend has now brought it back very close to the lower support line of the large long-term expanding uptrend shown. So this is a good point for it to turn up and the earlier break out the top of the uptrend back in March is a sign that the uptrend may be accelerating, and if it is it could turn up immediately, and the positive drilling results released a few days back are increasing the probability of this happening. You can read something about the fundamentals of the company here.
Another supporting factor is that oil looks set to turn up within its ongoing uptrend soon, following its recent dip, and it is planned to add a couple of oil charts to this article later, showing this.
Jericho Oil website.
Jericho Oil Corp, JCO.V, JROOF on OTC, trading at C$0.66, $0.504 at 10.45 am EDT on 2nd August 2018.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.