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General failure to close above resistances yesterday

Published Thursday, August 21st, 2014

Despite every contract gaining some ground yesterday the complex is still more on the negative side. The most important development was the unsuccessful attempt from RBOBto settle above the 13-day M/A resistance. The contract had a go at it, even broke above it but at the end of the day settled below it. This resistance is currently at 272.02. There are no targets above the price action unless it is convincingly closed above. On such a move the rest of the contracts are expected to get a boost and RBOB itself jump up to the 275.65/84 range resistance level. Staying with this contract, yesterday’s failure to break and close above this resistance does not mean that RBOB has re-established the downtrend that started in the middle of June. From the technical perspective it will only do so if the 8-day M/A support is above tonight’s close. It is currently around 270.38. On such a move the recent low from Monday at 263.74 should be targeted. In other words, this is the short-term range; the 13-day M/A on the upside and the 8-day M/A on the downside. Other contracts are somewhat lagging behind RBOB. It will be interesting to see how the new front-month on WTI, the October contract, will perform without any bullish support from the expired September. The technical fact is that the NYMEX crude failed to challenge its nearest resistance, the 5-day M/A that is at 93.72 this morning. The minimum requirement for this contract to start showing signs of reversing is a close above this level. Whilst it is below this resistance a test of Tuesday’s low at 92.62 and the range support at 92.07 is more likely. A close below the latter is very bearish.

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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.