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Bull-trap or trend reversal?

Published Thursday, April 16th, 2015

Both contracts were expected to put supports under pressure yesterday and neither of them did. On the other hand important resistances were not closed over. Yesterday’s shorts should be flat today and wait for developments. As stubborn as it may sound the chances are still on lower numbers but we need to see a confirmation of that in the form of weak closes today. Should the market trend higher this negative technical view will immediately be altered.

May ICE: The 34-day M/A was closed back above. It is currently at 45.60. The daily short-term M/As were not. They are currently between 46.02 and 46.25 with the highest of them the 13-day. The contract has rallied further this morning but has turned and is coming lower at the time of writing. It appears that a close back below the 34-day M/A is a sell again. In that case the 43.52 downside objective will be re-validated. It is a range support and the low on the May contract on March 23. Should we experience yet another change of heart and the market starts trading higher a close over the 13-day M/A is a buy provided that the settlement is not too close to the 100-day M/A at around 46.72. If it is then a close over the latter is a buy and such a move could send the price up to the 48.66 range resistance in the not so distant future.

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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.