Technical & Fundamental Oil Reports Specialists

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Correction mode. Watch the 8 and 13 day MAs.

Published Friday, January 22nd, 2016

Introduction.  The contracts are in correction mode, and reacting higher in an otherwise bear move. These sharp recoveries are to be expected and are unlikely to last long. The move down had been relentless and vicious – the correction is at least likely to be equally unpleasant. Last night only Brent had closed over one of its short term (s/t) MAs – the 5. The rest all settled below their s/t MAs but had put the 5s under pressure. Overnight the correction has continued and, at time of writing, all contracts (bar Heat) are above their 5 and 8s and look like heading for the 13s, where the trouble is likely to begin. Brent, meanwhile, is above the 5 and 8s and testing the 13. Whilst above the 8s the targets lower are on hold. WTI recovered well but still closed below all the s/t MAs last night. This morning it has moved over the 5 and 8s which are around 30.45 (8) and 29.72 (5). The target lower to 26.65 is on hold until it can move and close (m/c) back below the 8. The 13 day MA (“m” in the column below) is serious resistance, around 32.10, and the 2008 low at 32.40 is a problem zone. A “slingshot” move above the 8 to the 13 is entirely likely and bears should not be surprised by this.

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Posted by Robin Bieber