Crude Oil Weekly Technical Outlook

Oil N' Gold Team from Oil N' Gold at 01/31/10

Nymex Crude Oil (CL)

Crude oil's decline from 83.95 was still in progress and reached as low as 72.43 last week. With 4 hours MACD crossed below signal line again, crude oil should be regathering down side momentum. Initial bias remains on the downside this week and further fall should be seen to retest 68.59 support next. On the upside, though, above 75.04 will indicate that a short term bottom is formed, possibly with bullish convergence condition in 4 hours MACD. Stronger rebound should then be seen.

In the bigger picture, the case of medium term reversal continued to build up with fall from 83.95 extended. As noted before, whole medium term rise from 33.2 is viewed as a correction to fall from 147.27 only. Break of trend line support (now at 71/72) level will be the first signal that such rise has completed. Further break of 68.59 will support will confirm this bearish case and will target a retest on 33.2 low as correction down trend from 147.27 resumes. On the upside, though, in case of another rise, crude oil we'd continue to look of reversal signal as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.

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