Monday, May 23, 2011

Crude Oil CL - Possible Downside Breakout 5/23 7:15 PM CST

Crude oil made a dramatic sell off earlier (5/2-5/5) and since then it has been coasting along in what looks like a descending triangle (Pennant, flag, etc...). It looks like maybe it will finally come to an end soon as it bounces between the resistance and support outlined in yellow in the charts. A descending triangle preceded by a sell off would usually be an indication that the eventual breakout would be to the downside, and thats where my bets would lie too. I think this might come as early as the European session, but could drag on another couple days. I think personally a good entry might be tonight to try to sell any pop into the 98-100$ / barrel range and look for it to crack the support at 96-94$ / barrel. If it does, look out below, cause I don't see any support coming up, and it looks like the 100% extension of the recent sell off, shown in purple, lines up with the next low (@83.80).

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