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Both contracts are negative

Published Friday, June 20th, 2014

The NYMEX contract joined ICE and closed below all of its daily short-term M/As yesterday with a negative daily slow stochastics. Both contracts are now on the bearish side and lower numbers are expected. Being Friday we could see some kind of short-covering rally and supports could come under pressure early next week. Closes below supports or rallies to resistance levels are deemed to be a sell.

July ICE: The 39.75 range support was tested yesterday and it provided an opportunity for shorts to take profit on part of their positions. This level has been broken below this morning. Should the settlement be below this support the ultimate downside objective, last week’s low at 38.55 is very likely to be tested next week. It is recommended to cover if or when this happens and only re-establish short positions if closed below. On such a move we should expect further weakness, possibly down to the 200-month M/A support currently at 36.34. On the upside on an intra-day break above the 40.35 c/p the test of the daily short-term M/As should take place. The 13-day is at 40.62, the 5-day is at 40.81 and the 8-day is at 40.84. A rally up there today is a possibility but the market should not settle over this resistance area.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.