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Breakdown is on hold. Patience is needed.

Published Wednesday, September 16th, 2015

Introduction. It is good and useful to be prudent. It saves money. The potential breakdown indicated in yesterday’s report has not happened as the crucial supports highlighted in yesterday’s and today’s support column were not closed below conclusively with the exception of Heating Oil (by 12 points) and Gasoil (due to its early settlement). In other words lower numbers are not conclusive yet from the technical perspective and it proved to be premature to start selling short during the course of yesterday. The hard fact is that all the daily short and medium-term M/As are above the current price action on all contracts bar WTI. That, in theory, should mean lower numbers but again, there are no targets lower whilst the important support areas are below the price levels. On the other hand, rallies and closes above the short-term daily M/As will indicate a change of heart and will flip the technical picture bullish especially that one convincing move north will  have the daily sow stochastics turn positive.

WTI has no targets lower whilst it is above the 50% correction point of the latest move up at 43.54. Should it be settled below the next objective is the 42.17 range. A close over the 8-day M/A at around 45.02 is positive but it is the 13-day at 45.62 that has to be closed above in order to put bulls in control.

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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.