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Likely lower on both but need to see confirmation

Published Wednesday, April 29th, 2015

The headline sums up the current state of the contracts. They are more on the negative side but a confirmation of this is needed otherwise whatever shorts are left there they might become concerned and start covering, pushing the prices higher. ICE failed to close below the support below which it is recommended to short the contract again. NYMEX closed above its nearest range resistance but is still below all of its daily short-term M/As so it is perfectly reasonable to run a small part of any short positions.

 

June ICE: The crucial support is the 42.10/06 area. It was broken below yesterday but by the close the contract crawled its way higher and did not manage to settle convincingly below this support. Should it do so today lower numbers are expected. Such a move and close is a sell. In that case the next downside objective will be validated. It is the daily low on the June contract on January 20 and is at 40.49. At the moment this is the more likely scenario as all the daily short-term M/As are still acting as resistances and the daily slow stochastics, albeit low, is still negative. If the contract runs higher it is only advised to sell into that rally on a test but a failure to close over the 13-day M/A resistance which is currently at 43.08. On a close over this resistance short positions should be reversed and it will be recommended to acquire length as the 34-day M.A (43.65) and the 100-day M/A (44.46) will be expected to be in sight. For the time being, however, a close below the 42.10/06 support is the more likely prospect.

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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.