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Be flat on both contracts for now.

Published Friday, November 20th, 2015

It was advised to run reduced short position on the ICE contract and a reduced long position on NYMEX. Not anymore. It now makes sense to be flat on both contracts. It is because ICE closed above or right on resistances yesterday and NYMEX below supports. As a matter of fact it was advisable not only to go flat on NYMEX at last night’s close but also short and further selling this morning made it possible for new shorts to take profit in the early hours of today.

December ICE: It was the 8-day M/A that was settled above last night and the 5-day M/A that was right on the settlement. Strictly speaking shorts could still have a small part of their position running but given the undecided nature of the contract may be it is best to be flat. It is now advised to sell short if the 36.46 range support, last week’s low, is settled below for further weakness down to the crucial 35.10 range support, the weekly low back in July last year. Bulls will only feel comfortable to go long if the highest of the daily short-term M/As, the 13-day at around 37.70 and the 37.70/90 range resistance is settled over. On such a move we should see a rally up to this week’s high at 38.60, to the 34-day contract M/A at 37.79 and to the 38.2% retracement level of the September-November downtrend at 40.04. Weekly technicals are more on the negative side as the short-term M/As are well above the price action (the lowest one is the 5-week M/A at 38.50). This weekly bearish view would be confirmed by a close below the aforementioned 36.46 range support.

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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.