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Upside correction completed

Published Thursday, September 24th, 2015

It seems that the expected upside corrections yesterday did actually turn out to be exactly that. These retracements took both contracts higher. ICE tested its sellable resistance before trending lower whilst NYMEX briefly popped over the lowest of the day short-term M/As but closed below it.

 

October ICE: Since the 40.98/85 range resistance was tested but not closed above there was nothing wrong with shorting the contract on the close yesterday. Fresh shorts are now expecting softer numbers and they will be eager to put some money in the bank when the strong support area at 39.50/40 is approached. A close below the latter is a sell again for further weakness down to 38.55. This support is the monthly low in June 2014. Corrections like the one over the last two days are inevitable in a down trending market but one needs to be prepared to act in case it proves to be more than just a retracement. From this respect the formula seems simple. Cut your short positions into half on a sustained break above the aforementioned range resistance and the 13-day M/A at around 40.99 and go flat or even long if closed above. A jump to the 100-day M/A at around 41.81 is expected in the unlikely event of such strength.

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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.