Technical & Fundamental Oil Reports Specialists

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Expect failures at resistance and tests of support

Published Thursday, February 25th, 2016

Introduction.  The market is behaving very logically, although one could be forgiven for thinking otherwise. Over the past three days we have witnessed a perfect example of the springboard/trapdoor theory at work. It is only relevant in ranges and we’ve been in one now since mid-Jan. Around three or four days ago the contracts rallied over the short term (s/t) MAs (the springboard), which provided the platform from which to spend the next two days assaulting resistance. This was largely done on the back of dubious headlines, but enough to make the shorts cover. The upper end of the resistance was too strong, so by the closes two days ago the contracts looked tired and vulnerable. The result was yesterday’s action – below the s/t MAs (the trapdoor) to the lower end of the recent range where for the most part the 34 day MAs came in. This support held, the market rallied, and now all but WTI is back over the s/t MAs again suggesting tests of range resistance and in many cases the 13 week MA (13W in the resistance column below). The ebb and flow between the upper and lower end of the range is likely to continue – but don’t get sucked in the wrong way at the extremities.

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Posted by Robin Bieber