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Crude Oil Weekly Technical Outlook

Oil N' Gold Team from Oil N' Gold at 10/18/09


Nymex Crude Oil (CL)

Crude oil rose sharply to as high as 78.75 last week and closed strongly. The break of 75.0 resistance confirms that medium term rally has resumed. Initial bias remains on the upside this week and further rise should be seen to 100% projection of 58.32 to 75 from 65.05 at 81.72 next. On the downside, below 76.80 minor support will turn intraday bias neutral and bring retreat, probably to 4 hours 55 EMA (now at 73.98). But downside should be contained by 71.39 resistance turned support and bring another rise.

In the bigger picture, the strong break of 75.0 resistance confirms that medium term rebound from 33.2 has resumed and further rally should be seen. Note that crude oil is now in an important resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2). As we're expecting rise from 33.2 to conclude in this zone, we'll look for sign of loss of momentum in the current rise, as well as reversal sign. Nevertheless, note that break of 65.05 is needed to indicate that crude oil has topped out. Otherwise, further rise is still in favor.

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 there 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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