Technical & Fundamental Oil Reports Specialists

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Correction in an overall up-trend – Watch RBOB and the 5 and 8s generally

Published Thursday, May 7th, 2015

The trend remains up, but in a corrective phase. The market exploded north yesterday on a frenzied move, hitting targets higher on the way up. However, when the contracts are over $2 per barrel higher (or equivalent) than the 5 day MAs it is time to be very careful. This is usually an unsustainable gap to maintain, and so it proved yesterday. It was a reason to be very careful as the market became over-extended. The collapse that started mid-afternoon yesterday was not a huge surprise. Targets had been hit and the resistance in the form of the 34 week MAs was tough. The only worrying ingredient about yesterday was RBOB. The rest closed above all the short (s/t) MAs. RBOB did not and settled below the 5 but above the 8, but more concerning is that this morning it is below the 8, around 203.26 and the 5 around 204.13. If this is an early warning signal for the rest then we’re in for more of a dip yet. Observe the 5s on the rest very carefully today, and watch RBOB. WTI hit its target to 61.24 and 62.03 (34 week MA) and dipped. It is above the 5 around 59.95. It needs to hold this or it dips further in slingshot fashion to the 8 around 59.38.

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Posted by Robin Bieber