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Trends are still down but quick action is needed

Published Friday, September 25th, 2015

It is the same picture as 24 hours ago since there was only a modest daily change on both contracts yesterday and no supports or resistances were penetrated. In other words, the prevailing trends are still down but we should now see a quick test of supports otherwise shorts might get disillusioned whilst bulls might start feeling encouraged and be tempted to acquire length.

October ICE: This contract ran up to the sellable 40.82/99 range resistance on Wednesday and started to come off. This is the good news for shorts. The worrying thing might be that no test of supports took place yesterday. Nevertheless it is still reasonable to keep short positions and try to cover if or when the 39.50/40 range support area is approached. Protecting these short positions seems straightforward: the 13 and 34-day M/As at 40.82 and 40.86 are right where the crucial 40.82/99 range resistance area is. It is, therefore, only logical to start covering short positions on a sustained break over this resistance level and go flat and long if closed over. Such a performance is likely push the price of this contract up to the 100-day continuation M/A which is presently at 41.79. As long as the 40.82/99 area is acting as resistance the odds are on the test of supports.

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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.