Mike Paulenoff: Is Crude Oil Readying for More Downside?

If you are a regular reader here at The Crude Oil Trader you know that we share our numbers as well as the numbers and trades of other great traders and investors. We base our trades and views on the combined opinions of numerous trader/writers, and so should you. Today we would like to bring Mike Paulenoff into the mix.....

As of this moment, my optimal scenario for the nearby NYMEX oil price calls for a period of stability and/or a recovery rally that grinds into the 80.50-82.00 resistance area prior to another downside pivot that presses the price structure to new lows beneath 75.71 on the way to 70.00-65.00 thereafter.

At the risk of missing such a downleg in the absence of the anticipated recovery bounce, I will watch from the sidelines for a while longer prior to deciding if I should commit funds to a short position -- in the ProShares UltraShort DJ-UBS Crude Oil (SCO),  into NYMEX price weakness (though always a hazardous strategy to short oil into weakness).

That said, only a rally that sustains above 82.00 will neutralize the imminent threat of another plunge in oil prices and the U.S. Oil Fund ETF (USO).

Gold GLD Outperforming Gold Mining Stocks GDX

Gold, the SPDR Gold Shares (NYSE: GLD) and the Market Vectors Gold Miners ETF (NYSE: GDX, have turned positive this morning, in the aftermath of intense selling pressure earlier in the session. This is a sign of meaningful relative strength in the sector, but the day is young yet. Looking at the GDX chart, today's spike low at 41.35 followed by a powerful upmove to 42.50, where it continues to sustain since the opening few minutes, has the look and the feel of the completion of the correction from the 2/18 high at 45.56. With that in mind, I am looking for confirmation of today's low upon an upside penetration of 43.05.



From Mike Paulenoff, author at MPTrader.com, a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.
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Renewed Pressure Forthcoming for Crude Oil

From Mike Paulenoff at The Market Oracle....

My pattern work in nearby crude oil argues for more weakness after this little bounce off of the $58.00 area (into the $62.50-$63.00 area max). If weakness resumes as anticipated, then oil should head for new reaction lows in the $55-$53 target zone to complete the first down leg in the aftermath of the recovery rally from the January low at $32.70 to the June high at $73.23. Let’s notice that both the weekly momentum (relative strength) and weekly stochastics.....Complete Story