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Short-term daily M/As are the key on both contracts

Published Tuesday, June 17th, 2014

Both contracts looked bullish in the early hours of yesterday. The daily short-term M/As together with correction points were all below the market. Resistances were tested and even broken over. However, later in the day this enthusiasm ran out of steam and the contracts started to slip lower. The closing prices were disappointing compared to the morning levels. None of the contracts turned bearish just yet and given that longs had the opportunity to take profit yesterday morning it is now recommended to wait. The current technical state of the contracts is such that it is likely to have some kind of signal at tonight’s close.

July ICE: At the time of writing the 5 and 13-day M/As are above the price action. They are at 41.20 and 41.26. A close above this resistance area seems to be a buy for a rally up to the gap left on the July chart this morning at 42.50. Filling and closing above this gap would probably mean that the contract is running up to the 38.2% retracement level of the April-June downtrend, which is at 44.46. On the other hand the 8-day M/A that is currently at 40.72 and is being tested will provide us with a clue whether the contract is going to go into support-testing mode. Should it be broken below a test of the 40.35 monthly correction point support will be expected.

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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.