Nostra Terra Oil & Gas (LSE:NTOG) has dropped back from this year’s high of 6.13p despite a steady flow of upbeat news including the company announcing it is generating positive cashflow. The somewhat lacklustre market reaction to last week’s announcement of back-to-back drilling could be offering a decent opportunity for entry.
From a technical analysis point of view, the stock’s longer-term price movement is in a well established upward channel. Shorter term, the stock has moved down from highs in a tighter downward channel since January, but this may be about to change. That’s because the chart also reveals a bullish Falling Wedge pattern, and this price action frequently follows an exhausted run to a new high, often breaking to the upside on conclusion.
The Step Analysis chart above shows the key horizontal support levels, with current support at 3.4p. If this goes and the Falling Wedge pattern fails to reverse the share price’s fortunes, there is strong horizontal support at 2.83. In addition, a rising 200 Day Moving Average (DMA) offers additional insurance. As is often the case, the round figure 3p will likely offer a pushback before testing of this major support is required.
The Relative Strength index (RSI) is currently in the bearish sub-50 zone, but lows have been steadily higher. However, RSI highs have also been successively lower, so it’s RSI is currently undecided on direction – it’s clear a big move out of the triangle will happen soon. As a shareholder and believer of the story, I’m of the opinion fundamentals offer the ultimate support here.