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Watch the 55s. Sell rallies. Lower likely.

Published Friday, June 17th, 2016

Introduction. Once the crudes failed to hold the 34 day MAs the bears took control and the market dumped. Targets lower on all contracts were hit on the way down. After the initial targets were hit and moved below the logic was for the contracts – specifically the crudes – to head, slingshot (s/s) fashion, for the 55s. This is the next Fibonacci number after 34 and is a little used but often very useful MA. WTI headed for the 55 at 45.87, made a low at 45.91, and Brent’s 55 day was at 46.87 with a low at 46.94. This was good enough and these targets can for the time being be deemed hit and held. They are now key pivotal support and moves confirmed by closes (m/c) below the 55s are needed for the next leg lower. Today they are at 45.98 WTI and 47.01 Brent. Heat, meanwhile, hit its target to 145.64 and then activated a further objective south to 142.25, which held. RBOB hit its target to 147.12 and then the 200 day at 146.80 and has now moved over here. Gasoil is similar and holding the key range support at 421.50. The bearishly diverging daily stochastics and negative weeklies have proved useful guides to the price action. The market has completed another price cycle by hitting the 55s on the crudes and now they are key guides to the next leg. In the meantime, rallies to the 5 and 8s are sales.

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Posted by Robin Bieber