Technical Report 29 April 2020

Correction higher in progress - watch the 5 day MAs.

Introduction. Yesterday's early weakness took the crudes down to their targets - on WTI at 10.26 WTI (low of 10.07), and July Brent 22.05 (low of 21.92) - and then the contracts recovered. The gentle rally, that followed, took the crudes and Heat back up to the area of the 5 day MAs, where progress higher was halted. Meanwhile, June RBOB moved over its short term (s/t) MAs and challenged the hazardous 34 day MA, where it faltered to close over the 5 and 8s, but below the 13 and 34s. June RBOB has firmed overnight and is now above the 13 and 21 day MAs at 71.79/63 and 34 day at 71.19. Whilst above 71.79/63 it is steady and in resistance testing mode. 71.79/63 is now a key support pivot. RBOB's price action should encourage the crudes and June Heat to challenge the 5 day MAs, on WTI around 14.53; July Brent 23.79; and June Heat 73.26. Moves over the 5 day MAs would encourage tests of the higher 8 day MAs. Meanwhile, June RBOB begins to run into trouble at the upper end of the recent range starting at 77.98.

WTI hit and rallied from its target at 10.26, and is now testing its key 5 day MA, around 14.53, with the more dangerous 8 day around 14.81. A move over the latter would suggest more recovery potentially up to the 21 day MA, around 16.74. Be careful around the 5 and 8s - they are dangerous resistance. Only a move below the bull/bear (b/b) pivot at 11.88 would indicate a failure and a re-test of the 10.26 area.

July Brent is similar. It hit its target to 22.05 and recovered to challenge the 5 day MA, around 23.79 today. A move over here would make further strength to the 8 day MA, around 24.42, likely. Only a m/c over the 8 day would indicate more strength potentially up to the 13 day around 27.66. A move back below the b/b pivot at 22.86 would suggest a resumption of downside reassure to the 22.05 area and lower.

June Heat has held above the key support at 70.84, with the b/b pivot at 70.25. A move back below 70.25 would be negative. Meanwhile, it is testing the key 5 day MA around 73.26, and a move over here would suggest a further leg higher to the 8 day MA around 76.60.

June RBOB is a market leader and needs watching. It is now above the key 13 and 21 day MAs around 71.79/63 and the 34 day at 71.19. It needs to stay over 71.79/63 in order to be looking for higher numbers. 71.79/63 is a key support pivot. It must not move and close (m/c) below here or this recovery will be questioned. A m/c back below the 5 day MA around 70.38 would make lower numbers likely. Serious resistance emerges at 79.98 and then all the way up to 82.72, making this area very dangerous. Watch the key support pivots for guidance.

Gasoil has held key support at 188.25 and has 5 day MA resistance around 202.75. It needs to move over the 5 day MA to have any upside.

Conclusion. Targets lower were hit and held on the crudes yesterday, and all contracts recovered. The key to further upside will be the action on the crudes and June Heat at the 5 day MAs, on WTI around 14.53; July Brent 23.79; and June Heat 73.26. M/cs over here would point to more corrective upside to the 8 day MAs. Only m/cs over the 8s would make this correction more significant and deliver more substantial upside. Meanwhile, June RBOB must not m/c back below the key support pivot at 71.79/63 or this recovery is faltering. June RBOB encounters very serious resistance from 77.98 to 82.72. The contracts are correcting higher - the real test is the initial action at the 5 day MAs. This correction does not deliver anything more substantial unless the 5s are moved over and then the 8s safely navigated. Maximum care at the 5s is needed. The down trend remains intact whilst below the 5 and 8s, but June RBOB is challenging this.

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