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ICE is trying to turn positive, NYMEX already has

Published Wednesday, November 18th, 2015

December ICE: All this contract managed to achieve on the downside yesterday was the test of the lowest of the daily short-term M/As, the 5-day which is currently at 37.33, very close to the 8-day at 37.42. After this test the contract rallied above the 13-day M/A (38.03 presently) but did not close above it, therefore no buy signal emerged. It did, however, settle over the 37.75/90 range resistance, the continuation lows on August 24 & 25. In a nutshell, yesterday’s shorts should be flat now and wait for development to re-establish their positions. Bulls are advised to do the same. So, when would we have a fresh buy or sell signal? The price action around the daily short-term M/As will give us an answer. A close over the 13-day M/A is a buy. In that case we would expect further strength up to the 40.04/09 resistance area. This is where the 38.2% correction point of the September-November downtrend from 45.81 to 36.46 is together with the 34-day contract M/A. The odds of hitting this resistance will increase on a break and close above yesterday’s high. A close below the lowest of the daily M/As is a sell. Under the latter scenario last week’s low of 36.46 should be pressured shortly with the potential to go down to 35.10, the weekly low in July last year.

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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.