Tuesday, August 23, 2011
Is The Line Drawn in the Sand For This Crude Oil Market?
The rally has pushed this market back in to an area where you should find resistance right around the 85.30 level. This is a 61.8% Fibonacci retracement. We expect this market to come under pressure on Wednesday or Thursday.
Long term and intermediate term traders should hang on for the ride and protect profits with money management stops. Short term traders should be on the sidelines in this market. The longer term trend for crude oil is down based on our Trade Triangle technology.
Crude oil closed higher due to short covering on Tuesday as it consolidated some of last week's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning neutral to bullish hinting that a low might be in or is near.
Closes above the 20 day moving average crossing at 88.12 are needed to confirm that a low has been posted. If October renews this summer's decline, the 75% retracement level of the 2009-2011 rally crossing at 71.72 is the next downside target.
First resistance is the 20 day moving average crossing at 88.12. Second resistance is this month's high crossing at 98.60. First support is this month's low crossing at 76.15. Second support is the 75% retracement level of the 2009-2011 rally crossing at 71.73.
Crude oil Trend Analysis and Trend Score for Tuesday evening....
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90