Saturday, August 21, 2010

Crude Oil Weekly Technical Outlook For Saturday August 21st

Crude oil's decline from 82.97 extended further as expected last week and continued to sustain below the short term rising trend line. Initial bias remains on the downside this week for 71.09 support next. As discussed before, whole rebound from 64.23 should be finished at 82.97 already. Break of 71.09 will confirm this case and target another low below 64.23. On the upside, above 76.63 resistance will suggest that a short term bottom is in place, possibly with bullish convergence condition in 4 hours MACD. Stronger recovery would be seen in this case. But after all, risk will now remain on the downside as long as 82.97 resistance holds.

In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Break of 71.09 will confirm this case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, even in case of another rise, focus will remain on reversal signal as crude oil enters into resistance zone of 82.97/87.15.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.

Nymex Crude Oil Continuous Contract 4 Hours, Daily, Weekly and Monthly Charts

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