Good or bad, not much has changed since the last report two weeks back. On a longer term basis, uptrend looks intact. However, in the shorter term price is moving lower after failing to trade above resistance level of 92 for the second time. The uptrend is based on:
1) Upward trendline and price above moving average (Chart 2 & 3),
2) Break above early year high of 87, and staying above it almost two months now.
On the shorter term, price is correcting again after the third test of 92 resistance level. However, given the longer term bias, the two observations below may well be positive for price going forward: 1) Higher lows in the past 2 months, 87, 87.3 and 88 (chart 1); and 2)RSI level of 88 is the lowest of the three which may indicate price has corrected enough.
But again, similar to the previous report, two different scenarios may pan out:
1) Price is going through an extended consolidation, making a base before climbing higher. This likely coincide with stochastic bouncing off oversold level, RSI being supported around 40 - 50 level (chart2), breaking of short term downward sloping moving average (chart 1) and eventually closing above 92; or
2) The failed breakout was sign of the start of selling trend, with crude also failing to trade above RM280/barrel convincingly. If so price should trade below 87. Further support may come at 83 and 80.
However, the energy complex is showing some positives that were absent a fortnight ago. Gasoline finally printing 52 week high, confirming higher level of WTI while natural gas has been moving higher during the consolidation period of WTI. Also, energy stocks continue to trade higher, probably forecasting better earnings for the industry. Given the many positives, crude should be trading higher and if it can’t, the opposite move could be strong.
View the full report here http://www.osk188.com/Dindex.jsp
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