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Sell rallies to resistances or closes below supports

Published Wednesday, August 6th, 2014

The market behaved in textbook fashion yesterday. Targets on the downside have been hit and with the exception of Gasoil they have not been closed below. Shorts are probably flat now and they are looking for opportunities to re-instate their positions. They will be very tempted to do so in one of two cases: either if the downside objectives that were tested yesterday are closed below or if the whole complex corrects back to the sellable 8-day M/A resistances. On WTI this target was the 200-day M/A at 97.04. The contract bottomed out at 97.00 and then rallied a bit. Should this long-term M/A be closed below the contract will likely fall as far as the 94.31 range support and daily low on March 17. A rally up to the 8-day at around 99.02 is also deemed to be a sell but no short positions are to be held if the 13-day, currently at 100.36 but coming lower by the day, were settled above. Brent had a target at 104.07, the daily low on March 20. This is where this contract turned. On a close below further weakness is expected and the 102.75 range support should be shortly in sight. On a close below the latter there is every chance that this contract will fall below the $100/bbl mark. Its 8-day M/A is at 105.94 but those who short Brent on a rally up there are advised to protect their positions on a close above the 13-day at 106.62.

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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.