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Supports are being tested and holding – so far

Published Friday, September 18th, 2015

The contracts went into support testing mode yesterday but at the end of the day no sell signals were given. The ICE contract fell down to the bottom end of the range before rebounding slightly whilst NYMEX broke below crucial support before settling above it. One might argue that bears were given every chance to turn the technical pictures conclusively negative. They failed to do so therefore the markets are a buy as bulls are being handed over control. Those who decide to buy the dips are advised to do so with very tight intra-day stops.

 

October ICE: The support in question which is also the bottom end of the current trading range is the 40.98/85 level, the daily lows on the October contract on September 8 and 16. The contract bottomed out at 40.90 yesterday but a close below this range support is a sell. Such a close will green-light the lows on August 24 and 25 at 39.50 and 39.40 as the nearest downside objectives. If you went long on yesterday’s failure to close below this support profit should be taken when the 100-day continuation M/A at around 41.91 is in sight and losses cut if the 40.85 level is penetrated during the course of the day. In case of a significant rally a close over the aforementioned 41.91 area is a buy again. Under this scenario we should expect the 61.8% correction point of the July-August downtrend at 43.11 and the gap on July 31 at 43.30 to be tested sometime next week. As far as weekly technicals are concerned a close over the 13-week M/A at around 41.60 is bullish for next week whilst should the 5 and 8-week M/As be settled below (40.68/81) lower numbers will be on the menu.

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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.