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Supports should be tested on both contracts

Published Monday, August 3rd, 2015

Both contracts are on the bearish side if anything. The only difference is that whilst ICE did not give an affirmative sell signal the NYMEX contract convincingly settled below important support level. It is, therefore, reasonable to be short on NYMEX and might be an idea to start shorting the ICE contract as it is breaking below supports this morning.


September ICE: The contract settled 2 points above the lowest of the daily short-term M/As therefore we just missed getting a genuine sell signal. This morning the market has opened with a huge downside gap and is heading towards the next support area. It is last week’s low on the September contract at 41.50. Anyone who is running short positions is advised to cover there. Those who decide to short the contract during the day should also take profit when 41.50 is in sight and short-positions are to be re-instated on a close below 41.30/29. Such a move would likely push the contract down to the 61.8% correction point of the 2009-2013 uptrend at 40.35 and possibly as low as the 200-month M/A which is currently 38.80. Bears should only start getting concerned if the 5 and 8-day M/As at 42.32 and 42.27 are closed over. Until then expect supports to be tested.

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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.