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Be flat on both contracts for now

Published Monday, November 2nd, 2015

It seems that some pre-weekend short covering provided short-term support to the NYMEX contract. Supports were not closed below and resistances were not tested therefore it is recommended to stay put in this contract. ICE came lower on Friday, hit its interim support and has tested its stronger one this morning. Bears have probably covered this morning and they are now waiting for developments to re-enter the market.

 

December ICE: Shorts went home for the weekend with a reduced position as the 39.45 range support was tested. They were hoping for further weakness today as they were looking to square their book on a test of the 38.86 range support. The latter is the continuation low last week. As it turns out it has paid off to be patient as the contract has fallen as low as 38.91, close enough for shorts to go completely flat. Since the trend is down closes below supports or rallies to resistances are sells. Should the 38.86 level be settled below going short again is advised as in that case the continuation lows on August 24 & 25 at 37.90/75 will be green-lighted as the nearest downside objective. On the upside it is the 8-day M/A resistance currently at 39.97 that is considered a sell in case of a rally up there. Those shorts are then expected to cover on a renewed assault on the 38.86 support or protect the position and cut losses on a close above the 13-day M/A, which is at 40.45 at the time of writing. Until one of the two scenarios described above occurs it is recommended to be flat.

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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.