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Supports have been closed below

Published Monday, September 21st, 2015

The week ended on a negative note as both contracts settled below crucial and important support levels and as a result both of them have provided us with sell signals. Not only have sell signals been given but the contracts have opened with downside gaps this morning. They are on their way to test their downside objectives although some hard work is required to achieve these goals, especially on NYMEX.

 

October ICE: It was the 40.98/85 range support area and the recent daily lows on the October contract that needed to be settled below in order to get a sell short signal. It duly happened on Friday and the contract is trending further south this morning. The view on profit-taking has not changed. The daily lows on two consecutive trading days in August are the level just above which it is recommended to cover short positions. They are at 39.50 and 39.40. Should they be closed below re-establishing short positions is recommended for a further fall down to 37.75, which is the continuation low in August. In case the weakness seen on Friday proves to be a bear trap shorts are to protect their positions on a break and close over the highest of the daily short-term M/As, the 13-day which is currently at 41.19. Going long is still only logical if the 100-day continuation M/A presently at 41.87 is settled over. At the moment this is the more unlikely scenario. Instead we should see the next set of supports come under pressure.

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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.