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Very close to strong supports

Published Tuesday, January 6th, 2015

The headline of the last report published just prior to Xmas read: Not too intense bearish flavour on both contracts. The flavour might not have been very intense that day but it certainly got stronger in the subsequent two weeks and the contracts bid farewell to 2014 in a bearish mood, something that has continued into the New Year. There is, however, a very good reason for both ICE and NYMEX bears to take profit if the contracts make one more move down and then look for levels to re-establish short positions.

February ICE: Take the monthly low of 18.20 in August 2009 and the high of 76.15 in March 2013. You’ll find that the 50% correction point of this move up is at 47.17. Yesterday’s low was 47.39, maybe not close enough for shorts to take profit. If you see this support in sight today then it is highly recommended to go flat and only re-sell if it is closed below or if the 8-day M/A at around 50.38 is tested. In the first case profit should be taken just above the 45.50 support, the monthly low in November 2010. In the second case shorts should cover on a re-test of the 47.17 c/p support

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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.