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Are the contracts bottoming out?

Published Friday, January 9th, 2015

Both contracts have been in a downtrend for more than a month now. This weakness however has been consolidating for the last three days. Does this mean that the market is about to turn and enter a new uptrend? Speaking strictly from the technical perspective the answer is no, at least not yet. The contracts are still bearish although not as convincingly as they were at the beginning of the week. In a bear market rallies to resistances are sells which is still the case but a slightly different approach has to be employed this time around. It is not recommended to sell intra-day rallies to resistances but only on closes below them.

February ICE: On this contract the resistance in question is 47.17. It is the 50% correction point of the 2009-2013 uptrend. It is being tested at the time of writing. A close above is likely to push the price up to the 8 and 13-day M/As currently at 47.74 and 49.84. A failure to settle above this c/p resistance, in the other hand, is a sell. In that case profit should be taken at the 45.55 range support, the continuation high on June 16.

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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.