Wednesday, September 14, 2011

Good News Out of Europe is Not Enough to Send Oil Higher

Yesterday, crude oil closed over the $90 a barrel level. Today is another story, as crude oil is down. This movement underscores the importance of knowing when there is a conflict between indicators. In this case, our monthly Trade Triangle which is the dominant trend indicator is pointing down, while our intermediate and daily Triangles are pointing up.

This creates a Chart Analysis Score of + 60, indicating a trading range. Presently we would use a trading range type strategy to trade this market. Those tools would consist of the Williams % R indicator, the Donchian Trading Channels, and the Parabolic SAR indicator. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil posted an inside day with a lower close on Wednesday as it consolidated some of the rebound off Monday's low. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are neutral signaling that sideways trading is possible near term.

Closes below Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low. Closes above the May-July downtrend line crossing near 92.92 would confirm an end to this summer's decline. First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.92. First support is Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Crude Oil Trade Triangles......

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 60

1 comment:

kalpesh maniar said...

I guess the S&P wants to reach 1230 before resuming its southward journey, October will bring more bloodbath as euro fails to hold up. The crisis is deepening. For accurate forecasting on markets