Union Jack Oil Stock: Is the price heading towards GBP 14?

UJO stock corrected 60% in a year and 13% in a month.
UJO’s revenue has surged manifold over the years and posted a profit for the first time since 2016 in previous annual results.
UJO’s net debt has increased marginally over the years.

Market capital of UJO – GBP 21. 047

Current market price of UJO – GBP 19. 60

In the last session, the Union Jack Oil stock price closed on a flat note with a minimal decline of GBP 0.15 i.e. (0.66)%, there is not enough liquidity in the stocks as the stock is creating some gaps frequently which indicates that the attention of the investors is still away from this stock.

Union Jack Oil stock has melted down about 60% off highs and 13.38% in a month which indicates that the stock is overall in a downtrend, which can be confirmed by the 50, 100, and 200 EMA as the price is trading well below these EMA which is a bearish sign.

UJO’s revenue is increasing significantly over the years which means the company’s financials are super strong as the revenue is up by 1099% and 348% in 2021 and 2022 respectively and the company posted a positive net income for the first time since 2016 in previous results.

The market is expecting that the company can perform well in terms of revenue and profit as the company can post a positive profit for the second time in a row but the profit can be less than its previous quarter and the same goes for the revenue as it is also expected that the company can post lower revenue than the previous year.

Even after all such good things the price of the stock has been trading flat to negative since 2016, the rising net debts can be a major reason for the stock as the Net debt of the company is rising over years to years which is not a good sign for any company and the price is reflecting the same.

Technical analysis of Union Jack Oil

The stock is currently forming a falling wedge pattern in the daily time frame and heading towards the lower level or support area which is present in between the levels of GBO 14.25 and GBP 10, since June the price has fallen about 40% which is a strong bearish trend.

The stock has been consolidating for so long even after posting a wonderful result shows that there is some lack of interest from the buyers or institutional which can be confirmed by the candles as it is forming frequent gaps, if the price is able to sustain above the trendline then only we can say that the price is ready to escape the consolidation.

In the 1-hour time frame, the price has broken the falling wedge pattern and is now trading and sustaining below that level which means that there is some aggressive selling going on, the next support is near the levels of GBP 17.70 and GBP 16.35 which will act as a crucial support zone.

RSI

The Relative Strength Index has fallen from almost 70 to 43 which means the buying momentum has vanished and now the sellers are taking the charge in their hand.

CONCLUSION

Till the stock is trading below GBP 21 it will be weak for holding, once the price breaches that level and if the financial starts supporting the technicals then this stock can give some wonderful upside but if the company loses the profit-making momentum it can then eventually fall below GBP 16.35.