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Watch the c/ps and 55 day MAs. Expect a bit of a dip.

Published Tuesday, September 1st, 2015

Introduction. The contracts have had an explosive two trading days. One of the most frequently asked questions is what are the signals that a trend is changing direction – the answer is, at its simplest, when the key technical indicators (KTIs) have turned positive, which then changes the modus operandii from sell rallies to buy dips. The KTIs are comprised of the short term MAs, stochastics, and correction points (c/ps).  Whilst above the 13 day MAs – some way below the market at the moment – and with positive stochastics we are in the first stages of a fragile uptrend, and have headed for the first c/p of the recent down trend (in red below) and 55 day MAs – both dangerous resistances.  The move higher is a bit vulnerable but would be deemed to have failed on a m/c below the 34 day MAs. The market displayed, over the last two trading days,  a perfect example of slingshot (s/s) theory – over the 13 day MAs to the 34s, then over the 34s to the first c/ps of the recent down move, with the 55s hovering menacingly just above the c/ps. This is a massive move in 48 hours and all upside targets have been hit in the form of the c/ps and/or 55 day MAs. The c/ps are significant resistance at 48.06 WTI; 53.48 Brent; 165.88 Heat; 148.38 RBOB; and 502.25 Gasoil. These are all pivotal and close to the action. A move confirmed by a close (m/c) over would green light the next leg up to the 55 day MAs at 49.58/50.14 WTI; 54.63/55.22 Brent; 166.24/168.75 Heat; 150.11 RBOB (34 day); and 508.75/512.00 Gasoil. This move higher is vulnerable to a dip back whilst so far above the 5 day MAs – over $3 on the crudes – this needs to narrow, i.e. flat price dip a bit to be more tenable , but the move higher is safe whilst over the 34 day MAs.

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Posted by Robin Bieber