Thursday, March 22, 2012
Crude Oil Falls as China’s Factory Activity Shrinks
Crude's decline accelerated as equities retreated and the dollar climbed against the euro. The low range close sets the stage for a steady to lower opening on Friday.
Stochastics and the RSI are turning neutral signaling that sideways to lower prices are possible near term. Closes below last Thursday's crossing at 104.29 are needed to confirm that a short term top has been posted. If May renews this winter's rally, the 2011 high crossing at 113.75 is the next upside target.
First resistance is this month's high crossing at 110.95. Second resistance is the 2011 high crossing at 113.75. First support is last Thursday's low crossing at 104.29. Second support is the reaction low crossing at 98.38.
We continue to like the long term chart formation, which we believe will eventually push this market higher until early April. We are looking for crude oil to make its highs probably somewhere in the April, May period. With a Score of -70, this commodity is in an emerging trend.
With our monthly Trade Triangle still in a positive mode, we expect to see further gains in crude oil. Long term traders should be long this market with appropriate money management stops.
Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500