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Good recovery, but still fragile. Watch RBOB!

Published Thursday, June 2nd, 2016

Introduction.  The market is not quite ready to move significantly lower yet. This may well occur but more work to the downside is needed first. Yesterday was a correction lower, and then a recovery, in a market that is still in an up-trend – however fragile – and were the contracts to follow through higher this morning describing it as “fragile” may be misplaced. RBOB led the market by the nose yesterday and has done so for a while now. It fell through its 13 day MA and this weakness provided the example for the rest. It fell to the area of the 34 day MA support, around 157.27 with a low at 157.61, and bounced. The rest followed. At the same time the key 50% c/ps were being approached on Brent at 48.37 (low of 48.65), Heat at 145.30 (low of 146.62), whilst Gasoil hit its c/p at 437.00, with a low at 436.00, and bounced. In short, the contracts had pretty much completed a corrective price cycle lower and rallied. Heat is the only contract above all the short term s/t MAs – it did not close over them all last night but has moved higher overnight. The crudes and Gasoil are below the 5 and 8s but above the 13 and RBOB is below the 8 and 13 but above the 5. Watch RBOB at the 5 day and range support at 162.38/15 and the 8 and 13 day resistance co-located around 163.42/55 – these are the most important support and resistance pivots on the board today and will provide guidance.

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Posted by Robin Bieber