Technical & Fundamental Oil Reports Specialists

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Correction higher very possible but still in a downtrend

Published Wednesday, December 16th, 2015

Introduction.  The contracts remain in a downtrend, but one where targets have been achieved, key supports have held, and it is vulnerable to some violent short covering and corrections higher. The contracts are by no means all on the same technical page – WTI is above the 5 and 8 day MAs whilst Brent, Heat and Gasoil are below them all, and failed yesterday at the 5 day MAs. The 5 day gap – so wide two days ago and pointing to a correction higher – has now narrowed to virtually nothing. The stochastics are positive on all contracts. In these conditions it is advised to wait for developments and be prepared to leap either way. The odds are on more attempts to correct higher, but remaining in downtrend conditions whilst below the s/t MAs. WTI is the best performing contract. It alone has breached the 5 and 8 day MAs and closed above them both yesterday. Whilst above the 8 day – the higher MA – around 36.94 it has a very good chance of completing a slingshot (s/s) move higher to the 13, around 38.46. The correction higher, however, is very tentative and fragile so treat this view with caution. It would take very little to have this contract faltering and re-setting a target lower to the 2008 low at 32.40.

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Posted by Robin Bieber