John Wood Group (LON: WG) share price has been tumbling after the US equity firm decided to walk away without following through on its bid. The shares of the British engineering services firm tanked very hard on the news and closed with a 34% loss on Monday.
On Tuesday, the shares opened much higher, but the increased selling pressure turned the daily candle red once again. The latest analysis suggests while the long-term outlook may have flipped bearish on John Wood Group shares, a relief bounce can still be on the cards.
LON: WG Drops To Fresh Yearly Lows
Many buyers bought the shares of the multinational engineering & consulting firm in anticipation of a takeover by Apollo Global. The US-based private equity firm’s exploratory bid valued John Wood Group plc at £2.2bn, including debt. This would’ve meant an acquisition at 240p per share.
However, Apollo Global decided not to go ahead with the takeover after due diligence and didn’t share any reason. As a result, John Wood Group share price saw an unprecedented sell-off during the very first trading session of the week.
John Wood Share Price May Hit 160p Soon
Technical analysis of LON: WG chart shows that the shares had a massive gap down opening yesterday. The chart also reveals that since February 22, there has been no volume trade within the 160p-190p range. History tells us that such gaps tend to be filled sooner or later.
Therefore, in the coming weeks, I expect the John Wood Group share price to trade with the above-mentioned range for at least a short duration. This move will grab the liquidity in that region before making another move. This might also mean a retest of the 200 moving average on the daily chart that currently lies at 160p.
I’ll keep sharing my updated price outlook on LON: WG & other stocks in my free Telegram group, which you’re welcome to join.