The share price of Bowleven (LSE:BLVN) has taken a tumble over the past few weeks, having peaked at 40.5p at the end of July. Shareholders are awaiting appraisal results of the IM-6 well at the Etinde block in Cameroon, which spudded in May. Drilling and logging were predicted to take around 100 days which implies an announcement is likely at the end of this month.
Good news from the appraisal well would result in a decent price surge gaining back some of the valuation Bowleven has lost over the past few years due to infighting between the previous board and shareholders. HSBC Holdings increased its stake in the business from 7.07% to 8.02% on 30th July, paying around 39-40p per share.
The market put a stop to today’s dip with a bounce off 34.6p. This level is supported by a number of touches along the horizontal and by the bottom of a steep upward channel originating at the beginning of 2018. The Relative Strength Index’s (RSI) upward channel is currently blemished with a fall below but the upward trend is still not broken. An RSI printed below the blue line would indicate a significant change in strength, while a move slightly higher back into the black channel would confirm a decent bounce and imply a potential continuation of Bowleven’s upward trend.
Should this be broken next diagonal channel support can be found around 32p, and horizontal defence lies at 30p. Based on established diagonal resistance (red line) and trend channel toplines, a suggested first target can be found around 42-43p. Success with IM-6 at Etinde could offer much more.
