Thomas
DeChastelain
Memorial Archives

Will Crude Finally Lift Off?
posted Jun 17, 2006 at 01:58PM

Crude Oil Daily Chart



The daily chart, which has the stochastics brothers bottomed out, and bullish divergence on the MACD histogram is certainly in a position to reinforce a strong move up

Crude Oil Weekly Chart



A busy chart. The dotted blue lines are meant to correlate price with lows in selling pressure. Note in most cases this also corresponds to high levels of buying enthusiasm. As a rule these have market IT tops.

Ths current situation is interesting. One there has been little selling pressure, rather remarkable given the market environment. This suggests that oil futures are in strong hands. Note however that there has been little buying power as well. One or the other is going to change thier minds.

This struggle is also diplayed on the ADX on the daily chart. I would keep an eye on this indicator.

Crude COT Data

Discussion

It is ironic, or perhaps more accurately, "telling" that oil, most likely the chief target of the PTB's effort to drive down commodity prices, has actually held up the best. This in an enviroment where nearly every other asset class has been given a severe haircut.

If oil is going to do anything dramatic to the upside however, then it looks like it will have to be soon. It does look like most other commodities and equities in general look to be entering a period where at least some technical counter trend rallies will take place, perhaps lessening some of the head winds that have been facing crude.

I find it bullish that the commercials again used this period of consolidation to again shed some of their short positions.

One can see perhaps one more small dip to the bottom channel of the bullish consolidation channel and then one can expect oil to give it the ole college try in a break-out attempt.

I do not think that crude, even if it breaksout will make it to the top dotted resistance channel line. I think given the vulnerability of the markets prices in excess of $82-85 will trigger more deflationary selling which eventually will get to oil itself.

$82-85 is where I am eyeballing the middle solid red resistance trend-line.

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