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Do not be short at the moment

Published Thursday, December 3rd, 2015

Introduction. Bulls are scared as the energy market fell out of bed yesterday. Heating Oil and Gasoil are at levels not seen for six years whilst the rest is also looking anything but bullish. There are, however, two very good technical reasons not to be short at the moment. The first one is Brent. This contract fell to 42.43 yesterday with its lowest print of the last six years at 42.23. A close below the latter will undoubtedly hand the steering wheel back to the bears. The second reason is RBOB. This contract, once again, is the odd one out. Every other contract is below its respective daily short-term M/As. RBOB is holding the 13-day. A close below this support is bearish and if it is coupled with Brent moving and settling below its massive range support then the whole complex should head significantly lower. To be clear, we are not trying to paint a bullish picture. We are merely pointing out that due to these two crucial supports holding bears ought to cover and only re-establish their positions if the Brent/RBOB supports are closed below or the highest of the daily short-term M/As are tested but not settled over.

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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.