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Flat on both contracts

Published Tuesday, December 8th, 2015

The two contracts are behaving in a very similar technical fashion. Both of them were short yesterday morning (ICE was shorter than NYMEX), both hit their respective support levels and both failed to close below them. It is now recommended to be square on both and wait for developments. Closes below supports are sells just like rallies to and failure to close above resistances.

 

January ICE: The level where shorts were supposed to cover is the 37.01/36.95 support area. These are the lows on the January contract on November 23 and 12. It might be a little bit risky to sell short on a close below this support as the next important support level, the continuation lows on the same days at 36.46 might be too close for comfort. Should the latter be settled below, however, the only way forward is to sell as in that case the weekly low in July 2014 at 35.10 will likely be targeted. It is a very strong support level as it is the lowest print for the last 5 1/2 years. Since the trend is down rallies to resistances are seen as selling opportunities. It seems that a test of the 8-day and 13-day M/As at 38.03 and 38.12 are a sell provided that they are not closed above. In that case shorts will be advised to take profit if or when the aforementioned 37.01/36.95 range support is in sight again. The market has done what it was expected to do and going short now is recommended on a close below supports or on a failed test of resistances.

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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.