Technical & Fundamental Oil Reports Specialists

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Strong recovery. However watch the 5 and 8s – they hold the clues.

Published Monday, June 20th, 2016

Introduction. The key 55 day MA target supports held on the crudes on Friday. They were the most important support on the board, impeding progress south, and were hit and held. At the same time Heat also hit and held its critical support level and target at 142.35. RBOB did the same at the c/p and 100 day MA support at 147.12 and 146.67. Gasoil held its key support level at 421.50. Once these strong support and target levels all proved impenetrable the contracts were left vulnerable to general short covering and a rally.  Friday’s action narrowed the 5 day gap to zero – the 5 day gap is a very good guide to a market that is becoming overcooked – and the closes were all just above this MA. This makes a slingshot (s/s) rally to the 8 day very likely and this is what is occurring now. The 8s are the key resistance and are around 48.47 WTI; 49.70 Brent; 149.47 Heat; 152.80 RBOB: and 443.50 Gasoil. The action around the 8s will indicate the next leg – either through them up to the 13s, or a failure and back to re-test and probably fail at the 5s. The next leg will be determined by the action at the 5 and 8s. The daily stochastics are threatening to turn positive but have only done so on RBOB. However the weeklies are still very negative, which makes this rally precarious.

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Posted by Robin Bieber