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Crude Oil Weekly Technical Outlook

Oil N' Gold Team from Oil N' Gold at 10/31/09


Nymex Crude Oil (CL)

Crude oil's correction from 82.00 continued last week. Despite intra-week strong recovery, crude oil was limited below 82.00 high and weakened to new weekly low on Friday, indicating that such consolidation is still in progress. Initial bias is on the downside this week and further fall should be seen to 38.2% retracement of 65.05 to 82 at 75.53 first. Break will target 61.8% retracement at 71.52. On the upside, break of 80.46 minor resistance is needed to indicate that fall from 82.00 has completed. Otherwise, outlook will remain bearish.

In the bigger picture, with daily MACD crossed below signal line, a short term top should at least be in place at 82.00. Considering bearish divergence condition in daily MACD, whole medium term rebound might have completed too. FOcus now turns to trend line support (now at 70.48). Break there will add more credence to this case and bring deeper decline to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. On the upside, above 82.00 will indicate that rise from 33.2 is still in progress. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.

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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