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Patience please

Published Thursday, October 8th, 2015

It seems that the impressive rally on the ICE contract on Tuesday was a one-off and not the beginning of a new uptrend. The market failed at the next resistance, retreated but did not close below supports either. NYMEX tried to rally but was not able to get up to its sellable resistance level and managed a mere four point gain on the day. Crucial support was left alone, too. And the conclusion? As far as technicals are concerned there is nothing to do on either of the contracts at the moment.

 

November ICE: Tuesday’s strength was followed through in the early hours of yesterday and the test of the 34-day contract M/A took place. Buyers shied away from this level but the weakness that followed was not able to push the price below the 100-day continuation M/A which is exactly where the front-month contract settled. In this technical environment it is best to be patient and only start going long on a break and close above the 34-day that is at 42.76 today. If closed above the next target on the upside is 44.38, the daily high on the November contract on September 2. The former downside objective, the continuation gap at 40.50 will only be re-validated if the area of the daily short-term M/As together with the aforementioned 100-day are settled below. They are between 41.88 and 41.68. The daily slow stochastics is positive and displaying a bullish divergence. This suggests stronger number but once again: going long is only advised if the 34-day is below tonight’s settlement level.

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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.