Again, not much has changed since the last report, though with one notable difference, price broke through 87 support but bounced back. But 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 fourth time. The uptrend is based on:
1) Upward trendline and price above weekly moving average (Chart 2 & 3),
2) Break above early year high of 87, and staying above it. The breach below 87 two weeks back was swift, and so not a convincing break. In fact, it bounced off the 9-mth up trendline at 85.
On the shorter term, price is correcting again after the fourth test of 92 resistance level. Clearly price is still consolidating but with a revised support of 85, as it is the most oversold level in the past 3 months and was right on the trendline.
With any consolidation, two different scenarios may pan out:
1) Price is still making a base before climbing higher. The base is probably made as stochastic bouncing off oversold level two weeks back. So price has to break short term down trendline(chart 1) with eventual close above 92; or
2) The multiple 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 the revised support of 85. Further support may come at 83 and 80.
But again, energy stocks keep on giving positive signal. It continues to trade higher, probably forcasting better earnings for the industry. And again, given positives equities, crude should be trading higher and if it can’t, the opposite move could be strong.
