Saturday, April 24, 2010

Crude Oil Weekly Technical Outlook

Crude oil's rebound from 80.53 resumed towards the end after initial setback and closed strongly at 85.12. Further rise would be in favor to retest 87.09 high but after all, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes. On the downside, below 81.73 minor support will flip intraday bias back to the downside for 38.2% retracement of 69.50 to 87.09 at 80.37 or possibly further to 61.8% retracement at 76.22.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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