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Watch the 5, 8 and 13s. RBOB is still the key.

Published Thursday, November 5th, 2015

Introduction. There are times when one needs to be very careful indeed. Yesterday was an example. RBOB had hit a significant target level at 146.04, and this was going to determine the next leg and dominate the price action. In addition, the 5 day gap theory (the gap between the price action and the current price – in yesterday’s case the price action started the day too high above the 5 day MA) was in evidence and a real danger. These two factors alone – RBOB at a key resistance and target level, and the 5 day gap being too wide – were enough to make for hazardous trading conditions. A wide 5 day gap is always a reason to be very wary. Combine this with the fact that all contracts had hit key resistance/target levels and one had a potent combination of perils. The contracts dumped but are currently holding support. RBOB is above all the short term (s/t) MAs, whilst all the rest, less Brent, are below the 5s but above the 8 and 13s. Brent is below the 5 and 8s but above the 13. The stochastics remain positive, but are wavering. The market is fine, albeit in a corrective phase, whilst the lowest s/t MAs holds.

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Posted by Robin Bieber