Hello. I'm Paddy Osborn from Beta Group and today we're going to be having a look at oil.

So we've got the NYMEX crude oil contract here. Now we know already this is the weekly chart. We know already previous to this we've had that huge run up a couple of years ago up to 147, the complete collapse back down towards the end of 2009 down to a low of around 35 and since then we've had a strong recovery followed by a kind of grinding edging higher for the last several months, really for the last almost a year. We were at 70 a year ago and we're below 80 now. So it has really gone nowhere. It is slightly higher if anything, but it's really struggling.

What's happening is I think there is a very close correlation between equity markets and oil. Equity markets reflect the strength of the economy. A stronger economy means more people will need more oil to do their various things and the price of oil is reflected that way. So it's not a big surprise to see the correlation there.

But we want to try and see is are we going to see this going higher hitting new highs above 87 or are we going to see it coming back below 70, or is it going to stay in this rather dull range for a little bit longer? I would suspect the last of the three, but let's have a little look at the daily chart to put a bit more detail on it.

Okay, so we saw here in March and April that the market did actually edge above 80, stayed above 80 and then launched itself off 80 in late March to a high around 87 and then traded around this level, tried again at 87, rejected this level twice at the same level and then collapsed very strongly.

So having launched itself off the 80 level here, it then collapsed straight through. So the buyers that took control at this level were completely overtaken by the sellers at this level and for the moment, the sellers are still in control. We've seen some very strong selling here. There's a small rebound but didn't challenge the 80 level. 80 another big round number and I like to do round numbers.

We'll come back to this in a second, but what we see as well is the price recovered back in June back up to 80, but on that day it touched 80 which was last week. Touched 80 and then closed below 79.

So again, these sellers that were aggressively selling here that had taken out these buyers here looked like they're still in the market here. So there is still resistance at 80. I see that level still being a bit of a barrier.

Now this week has started well, so we'll have to see how things go, but 80 may be challenged, but I think 80 may still hold.

Let's have a quick look at the volume as well. You see the volume along here of the histogram. Obviously the longer this little pink line the bigger the volume.

Now as far as volume is concerned, I consider volume as aggression. Someone has been aggressive. If I see big volume and clearly these lines here are taller than all the ones round them, someone has been aggressive and whenever I see a tall line here, I immediately look up here and see who is being aggressive because 19 times out of 20 when you get bigger volume, the market will move okay and it's not very difficult to see who is in control here, who has been aggressive. It's the sellers.

The other interesting thing is that as we've gone along in the last few weeks through June and the market has actually recovered and the buyers, to be honest, have been in control taking it from just below 70 back up towards 80.

What's been happening with the volume? As the market has gone up from 70 to 80, the volume has faded away and it's got less and less and less. So the strength of this move up has been decreasing as it has gone on. People are happy to buy at 70. They think it is cheap. 75, 80 not that keen to buy at 80. It looks a bit expensive, so that's been reflected in the volume. So now that also tells me that this 80 resistance may continue to hold.

Another thing, we're looking on our stochastic again, we can see here, here it was overbought and gave a sell signal right back here. It went sideways for a number of weeks before falling away. Here it has had this good run up and again we've gone overbought again. We've had a sell signal, but I don't take these sell signals just blindly on their own. Too many of them fail, but it's a warning that potentially we may have a reversal. You have to wait for the price to tell you about the reversal. We'll have to see.

So for me the level is 80. If it breaks above 80, I think we can certainly see back to 85, maybe not 87, but I personally think that 80 is going to hold and the medium-term. So for me medium-term two to four week view will be that the market will stay in this 70 to 80 range and it may well continue that way through the summer through August.

That is, I would say, going to be dependent on the stock markets doing something similar. If the stock markets collapse, I can see it coming back down to the lows at 70 and maybe lower. If stock markets recover strongly, which I don't expect, we may see it go above 80. But for me, I think it's going to stay in this range.

So trade the range. Sell it around 80. Buy it back around 70. Keep doing that for the rest of the year and you'll do fine.

My name is Paddy Osborn. Hope you enjoyed that. Thank you for listening and I'll see you soon.