Petrobras Argentina to Fall on Bearish Sign: Technical Analysis

Petrobras Argentina SA (PESA), the country’s third-largest crude producer, is set to fall as much as 14 percent in a month after the shares entered a trading pattern that usually precedes a downturn, Recognia Inc said.

The stock has formed a so-called head-and-shoulders top, three consecutive peaks in which the middle one is highest, a bearish signal, Recognia said in a note to clients. With the shares already trading below their 21- and 50-day moving averages, the firm expects the stock to fall to a range between 4.30 to 4.50 pesos in 34 days from yesterday’s close at 5.01 pesos.

“We’ve noticed bearish events since mid-August,” Peter Ashton, the vice president of client services at Ottawa-based Recognia, said in a telephone interview. “The market is quite choppy so there isn’t much certainty on what the long-term direction is going to be.”

A Petrobras Argentina press official said in an e-mail that the company declined to comment.

The company, a unit of Brazil’s state-controlled oil producer Petroleo Brasileiro SA, is down 19 percent this year, compared with the Merval index’s 2.3 percent drop. The shares underperformed the benchmark following the government’s expropriation of oil producer YPF SA in April and after its local-currency credit rating was cut by Moody’s Investors Service, which cited the risk of government intervention in the industry when it reduced the ranking last month to B1, four steps below investment grade.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net