The technical rebound of Circle Oil should be stopped in the coming trading sessions by the GBp 13.5 resistance.

The rebound recorded in the last trading sessions is not justified by Circle Oil’s fundamentals which are still fragile. The Thomson Reuters consensus has recently revised downward EPS estimates. It is often an indicator of the coming decline in profitability.

From a technical viewpoint, the security is in a bearish trend in the long term, even if prices have increased in the short term. The current technical rebound allows the stock to be close to its GBp 13.5 resistance. Despite the breakout of the 20-day moving average, prices should decrease soon because of the bearish trend in the long term.

The bearish trend and fragile fundamentals let think of a continuation of the downtrend. An entry point could be fixed close to the GBp 13.5 resistance in order to open a short position in Circle Oil. The first target price will be the short-term support area at GBp 11 and a stop loss order will be placed above GBp 13.5.