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Further test of supports

Published Tuesday, June 24th, 2014

July ICE: The next target on the downside was not tested but might be today. There is no technical reason to turn neutral or bullish as the contract lost further value and closed below the 39.75 range support. This is the daily low and double-bottom on the July contract on June 10 & 11. It was said last week that shorts should take profit on half of their positions on a test of the 39.75 level and go completely flat if 38.55 is in sight. Given that the former was settled below the odds of the test of the latter grew significantly. Needless to say that an eventual close below the 38.55 support is also a sell. Should this level be settled below the next important support is the 200-month M/A at 36.34. This is all well but what should be the strategy in case the above negative view turns out to be unjustified and the contract rallies? Half of any existing short positions should be covered on an intra-day break over the 39.75 level and no short positions should be held of closed back over.

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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.