March 17 (Bloomberg) -- Oil will test resistance near $49 a barrel and a breakthrough would set up a stronger rally, according to technical analysis from London-based broker PVM Oil Associates Ltd.Oil futures in New York will meet resistance at around $48.59 and $48.83 a barrel, the highest intraday prices this year, PVM said in a report. The 500-week moving average, currently at $48.88, is another important level, it said.
Yesterday, April futures rose $1.10 to $47.35 a barrel, the highest settlement since Jan. 6. It was the first close above the 100-day moving average of closing prices since Aug. 1, a bullish signal for some analysts. The contract rose as high as $48.02 today before giving up its gains. Oil has traded within a $13 range since the start of February.
“When the break comes it will be to the upside,” PVM analyst Robin Bieber said in a report today. “However, timing is everything and once again we are up and testing the higher end of the recent range. We’re back at hazardous resistances.”
The 100-day moving average will now become a support line for prices, PetroMatrix GmbH said in its daily report. Resistance will be found at $50 a barrel and the upper Bollinger band, currently $50.17.
Analysts use moving averages and historical highs and lows to find support and resistance levels for prices. Bollinger bands, a technique developed by analyst John Bollinger in the 1980s, use historical volatility to set upper and lower targets. They typically run either side of the 20-day moving average.
To contact the reporter on this story: Will Kennedy at wkennedy3@bloomberg.net
Last Updated: March 17, 2009 08:48 EDT
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