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Crude Oil Weekly Technical Outlook

Oil N' Gold Team from Oil N' Gold at 10/24/09


Nymex Crude Oil (CL)

Crude oil's rally extended further to as high as 82.0 last week and met mentioned target of 100% projection of 58.32 to 75 from 65.05 at 81.72. With 4 hours MACD staying below signal line, an intraday top should be in place and some sideway should be seen. Nevertheless, as long as 77.61 minor support holds, consolidation should be relatively brief and a break of 82, will bring rally resumption towards 50% retracement of 147.27 to 33.2 at 90.24. However, note that a break of 77.61 will indicate that a short term top is at least formed and deeper decline should then be seen to 75 resistance turned support first.

In the bigger picture, medium term rebound from 33.2, which is treated as a correction to whole decline from 147.27, might still be in progress. But after all, we expect such rebound to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2). Hence, focus will remain on loss of momentum and reversal signal even in case of another rise. A break of trend line support (now at 69.14) will be the first signal of topping and further break of 65.05 will confirm and turn outlook bearish.

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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