In this post, we are going to take a technical look on Shiraz Oil Refining Company in more depth.

Exhibition below depicts S.O.R.C life-time chart from the time listed on Tehran Stock Exchange. A huge rally skyrocketed the price to IRR 21,840from IRR 1,907 in less than a year-the price never hit again-. Thereafter, a frustrating decline just started and was in action 2.5 times of the rally! But What for now on? Is there any market bottoming taking place in near term? Let’s check it out:

sorc1

 

As it is obvious, a resistance level has been broken by a significant margin and has acted as a support for twice. A break above almost 2-year declining channel is an initial sign of a trend change. From the other hand, conservatively talking, a bullish channel has been formed lately (visible on the chart). This zone is almost equivalent to %61.8 fibbo retracement ratio of the recent move from the bottom to the peak of IRR 8,514 hit on late March 2016. From the timing point of view, it is considered very important that the low of IRR 5,386 zone (RET %61.8) has been hit almost simultaneously with the % 61.8 fibbo time retracement from the latest rally, shown in the picture below. As a result, we believe that the odds of a correction end on this zone has risen.

sorc2

The initial support zone lies at IRR 5,635, although, in case this level fails to stop the price from declining, the next support level overlaps the trend pull back on IRR 4,850. In this case, the decline is forecasted to last for another two trading weeks. Alternatively, the resistances lie on IRR 7,420 and IRR 8,523 accordingly.

In the end, to conclude from all aforementioned factors, we believe that the bearish trend is over in mid-term and all near term declines are interpreted as correction from the recent rally and as long as the IRR 4,850 level is held, this scenario is considered as valid.