Chart of the week: Crude Oil

A new feature to the Trader’s Blog will be the addition of the Chart of the week. Each week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

The June Crude Oil rallied every day last week. The market put in higher lows and higher highs on a daily basis after it tested the support trendline (#3 on the chart) last week on Monday morning. Any technical trader would say last week had all of the necessary ingredients for a bull run.

In today’s trade (Monday April 30th), the Crude Oil has been under pressure following unfavorable reports out of Spain and the United States coupled with profit taking ahead of a Labor Day Holiday in Europe and Asia.

The selloff seemed to be targeting the dominant trendline and the 20 day moving average (#1 on the chart) above the highs on the daily chart that kept Crude Oil in a downward channel until Thursday of last week when it closed above. This line was the dominant resistance for months, and may be the dominant support if the market can stay above in the near term.

If the Crude does not sell off any further, the near term target would likely be a price of $105.50. This price is where the high price from April 17th and the upper resistance trendline will converge on the chart(#2 on the chart). Closes above this number should be seen as a very bullish signal.

Any closes below #3 on the chart would likely invite heavy selling pressure on the June Crude Oil, as it would signal a break in the support trendline that the market has held since December 2011.

 

Brian Booth

Sr. Market Strategist



bb****@lo*************.com











18 thoughts on “Chart of the week: Crude Oil

  1. hi Brian,

    any comments on the massive sell off over the past 3 days?
    a bear trap or a sign of sub 90 oil?

    regards

    Colin

    1. I am on the fence on this one for one reason......the 200 day moving average on the daily chart. Fridays low was not only the 200 day, but also the the very bottom of the trend (straight line accross the lows that began in late Feb).

      Overnight Crude dropped further, but regained its foothold at the 200 day to begin the week. If the market can stay above the 200 today, then we may have a chance of holding. Below the 200 day, the first support is the Fibonacci 50% at $94.

      Todays trade will be important in my eyes. I will be advising my customers to watch these levels over the next few days.

      Feel free to gove me a call (888) 272-6926.

      Brian

  2. hi Brian,

    Your charts are indeed helpful.
    I would like to hear your comments on the recent 3 day massive sell off in June crude futures.
    Do you think the odds are for lower numbers or we are seeing a "bear trap"?

    Regards

    Colin

  3. Following the pop of the past week or so---and the huge debate as to whether it has bottomed / is bottoming or head on down below $1.50mmbtu, would be nice to see a current chart and your analysis on nat gas.

    1. Brad,

      I would produce a chart on the natural gas market if I had any strong feelings for a direction. Unfortunately, I do not. There were multiple analysts that I follow thazt suggested the market would break 2, and find 180 and possibly recover from there. They also suggested the rally would be short lived (thanks to the trend over the last several months) and also because 1.50 is supposedly where a true breakeven would take place.

      I am all for the idea of "getting ahead of the game" and hopefully catching a nice move upward in a market that is extremely oversold, but I would rather see a mix of technical AND fundamental reasons to get involved. I think until we see natural gas being taken seriously as an alternative energy source, especially in the United States, we will continue to obey supply vs demand and see rallies sold.

  4. "near term target would likely be a price of $105.50....near term target would likely be a price of $105.50." With the market as I post at 106.27, I would have to agree that it's pretty bullish. That huge head and shoulders bottom covering almost the last year that Adam has been talking about could give it a lot of push.

    1. The Crude futures today (as expected) closed almost to the penny on the trendline, just to keep us guessing. It also closed on the Fibonacci 50% retracement.....what a surprise.

      Crude Oil will face the Department of Energy numbers tomorrow, then the ECB rate decision on Thursday, followed by non farm payrolls on Friday. Closes above $107 a barrell will be extremely convincing to me.

    1. Thank you, I hope you were able to catch at least a piece of this move. I have several other charts I can share with you if you would like them.

      Contact my office directly by email or at (888) 272-6926

  5. Today, the rally in Crude Oil rallied through the target. Now mid-day, it has settled back at the trendline. It would not surprise me at all to see it close on the target at days end......just to keep everyone guessing.

  6. Brian, that is a great chart. After today's move following ISM shows your chart was spot on! Good work!

  7. Very good initiative. Interesting reading that will surely be instructive for us. I also wish that you, when possible, also show the volume and comment on its significance.

    1. Owe,
      Thank you for the reply. I will definitley keep the volume in mind in the charts that I submit each week. After the first quarter in the United States drew to a close, we took note of the volume in the markets drying up. The end result was a very erratic and unpredictable trade. Some even suggested that algo programs were in total control for a few weeks. This week will bring an ECB rate decision and a non farm payroll report that hopefully bring a reliable volume back to the markets.

      Feel free to contact me by email or phone at (888) 272-6926. I have similar charts on all of the markets that I advise my customers on.

  8. This chart helps me understand the market better. Let's have these charts as a regular feature for us neophytes.

    1. Al,

      I will be submitting similar charts each week for educational purposes.

      If you have any questions or thoughts, or if you would like me to share other charts with you before next week, feel free to contact my office by email or phone at (888) 272-6926.

    1. Thank you Bob.

      If you have any questions or would like me to share other charts, feel free to contact my office by phone or email. I would be happy to get them to you.

      PH (888) 272-6926

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