The Picture Turns Bearish For Energy Contracts

On October 24, 2012 by TradingDesk

Refined products are up slightly this morning, following a heavy week of selling, led by a $1 bounce in Brent crude after the Chinese Purchasing Manager’s Index (PMI) which had its best reading in 3 months, although it still showed contraction.  Gains have been limited by the Euro-zone PMI report, which came in at the lowest level in over 3 years.

The technical picture has turned bearish across the board for energy contracts, with most indicators suggesting lower prices to come, although most do show an over-sold condition, suggesting a short term corrective bounce is likely.  RBOB has critical chart support layered from $2.45-$2.55.  While this area was the launching point for RBOB’s last 2 major rallies, a break here puts sub-$2 prices in play.   Meanwhile, if HO falls below $3, the next target is in the $2.85 range.

The FOMC will have an announcement this afternoon, although markets are largely ignoring it – for once – as it appears unlikely that the FED will follow its most recent major quantitative easing announcement with any substantial changes to its policy.

CLICK HERE for a PDF of this morning’s charts

 

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