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Upside correction which should not last

Published Wednesday, December 9th, 2015

Introduction. The downtrend continued yesterday although losses were nothing like the previous two days. This, however, does not change the fact that the trend is still down and lower numbers are on the cards. It might not happen today as the sell-off of the last 2-3 days was so fierce that some kind of retracement is in order. In technical terms, the gap between price levels and the closest of the daily short-term M/As, the 5-day, was so big that it is bound to narrow before the downtrend resumes. If this really is the case then rallies up to the 5-day M/As are considered sells while the longer-term downside targets are the lows of 2008. The 5-day M/A is 38.89 on WTI. Those who will short the contract if it gets up there are advised to take profit on half of their positions when the 37.75 range support is tested and then go flat on a test of the 35.52 range support. Below that this contract is likely to be heading to the 2008 low of 32.70.

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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.