Can Cairn Energy's share price continue higher?

Our chartist got his call right, and now the oil and gas company has doubled in value since March.

Cairn Energy (LSE:CNE) 

Cairn Energy (LSE:CNE) 11 months ago was trading at 173p.

The price indeed reversed, eventually closing a session at 60.7p. While during the trading day, it fell to 57p, we feel the fact it did not close below 60p shall prove important.

And yes, of course we're chuffed at making this accurate prediction, especially as the bounce has seen the share price more than double.

Cairn Energy for 16/07/2019

There is a fly in the ointment, worth mentioning if the company find an excuse to issue negative news. Below 138p would now prove a bad thing, risking reversal to an initial 91p with secondary, if broken down at 60p.

We're fascinated with price movements since the bottom was achieved at 60p.

As the chart below highlights, the share has proven reticent about regaining the historical red uptrend.

Sometimes, when a price pays homage to a prior trend, any movement above such a level tends to prove quite flamboyant. 

In the case of Cairn Energy, exceeding red on the chart (presently 142p) should make travel to 162p almost a foregone conclusion.

If exceeded, our secondary works out at 180p and presents a price level where we anticipate some hesitation occurring.

Visually, it's easy to imagine 180p bonking against the immediate blue downtrend but, more importantly, it also matches the false dawn spike of February 2020.

This results in a situation where 180p presents itself as a "glass ceiling in waiting!".

For now, we're fairly impressed with Cairn, but we do need to remind readers of two caveats. Firstly, we cannot calculate below 60p and secondly, despite our previous prediction, past performance is no guarantee of the future.

Source: Trends and Targets. Past performance is not a guide to future performance.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of interactive investor.

All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.