Monday, July 4, 2011

WTI Crude Oil Analysis 9:00 PM CST 7/4

(Chart 1 - WTI Crude Daily Zoom)
(Chart 2 - WTI Crude Daily)

Amazing that a line drawn between 11/17/2010 and 02/15/2011 would be relevant on 06/27/2011, but it was. This line is the low line of the bullish channel (light blue) drawn on the daily chart. Price broke out of this channel when it gaped up on 02/23/2011. After the May/Jun 2011 crushing, we got back inside it, and the recent low fell right into the low line, as we failed there, headed higher, and still haven't really looked back.

With this snapback rally of the last week, we are now also back inside the dominant bearish channel (magenta) as well. The current trading range is defined as 92.22-95.14.

With all of this out there, here is my analysis:

Price is very fair here according to both channels, and is neither overbought or oversold.
The upper wicks of the last 3 sessions (as well as this current one), suggest that the upper bounds of the trading range are being respected. Until we close over 95.20, I think crude can be sold with a target of 92.25. I would rather not touch it though, see what way it moves, then trade it from there.

Here is the "Crude choose your own adventure"
1. We respect 95.20 and head lower
- If we do this sooner rather than later, the low of the bearish magenta channel and the low of the trading range should support the selloff and attract buying. All of this being said, the light blue uptrend line, should still be considered the be all end all ultimate support for any buying.
2. 95.20 resistance does not hold and we head higher
-Even if number 1 occurs and we head lower, once that sell off is exhausted, the following analysis still holds. I expect crude in the next 2 weeks to close above 95.20. July 20th presents an interesting set of circumstances. On that day, $100, the top of the bearish magenta channel, and the top of the bullish blue channel will all align. This is extremely powerful, and any move into this range around that time should be sold with good confidence.

1 comment:

  1. 500 sell side contracts at 97 sure put a damper on any longs there.