Tag Archives: crude oil

Hope you had a good 4th of July weekend! It was cloudy and rainy most of the time in Indianapolis, but we did get some sun on Sunday so that helped make up for it. Over the last week crude oil ($USO) has been catching some bids as the turmoil in Egypt has been scaring traders. Crude is now up against resistance and there’s an interesting setup taking place in oil volatility.

Here’s a piece:

With the big move last week we now have an interesting chart setup in light crude oil ($CL_F). As the chart below shows, we are testing the falling trend line off the 2011 and 2012 highs. If this trend line is unable to hold then the next stop on the higher gas prices trade could be $110 – the previous high from March 2012.

To see the chart and to read the rest: As Middle East Fears Rise Crude Hits Resistance (TraderPlanet)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Crude oil ($CL_F) has been rising over the last few weeks and I thought it’s time to check back in with the black gold commodity. In April I wrote about how light crude oil was testing Fibonacci support at $86 while sentiment data calling for potential continued weakness. It seems the bulls were able to hold support and crude has rallied 12% back above $96/barrel.

The energy commodity now sits just under the falling trend line that’s batted down previous rally attempts going back to 2012. This trend line as well as the previous closing high at $99 are where buyers are likely to set their scopes. As often said, the more times a level of resistance (or support) is tested the more likely it is to break. We can’t know how many times it must be tested, but we if crude can catch a few more bids we might get our third chance at higher oil prices. I’m not writing to be bullish or bearish on oil, but I will be watching these two levels of resistance and see how price reacts. As always, let price action dictate our bias.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

It’s been nice to see oil prices fall as it’s made it a little less painful to fill up my gas tank. Commodities in general have been dancing to the deflationary drum beat over the last couple of weeks, oil ($CL_F) included.

The price of a barrel of light crude oil now sits at Fibonacci support, specifically the 61.8% retracement level. This happens to be the near the previous low we saw in 2012 when oil reached $84/barrel. Crude also sits below its major 50- and 200-day moving averages, leaving not much level to stop future weakness in the commodity.

It’s hard to see in the chart below, but when focusing on the last two candlesticks we can see a version of a tweezer candlestick pattern. Typically a bullish tweezer pattern would have a strong down day (red candle) which is followed by an up day(green candle), each of the lows of the two candles being at the same level – creating the appearance of tweezers. However in crude oil the bearish and bullish candles are reversed, invalidating a true tweezer pattern. What’s important is the level of support that held up two days in a row, and happened to be at a Fibonacci retracement level. At least in the short-term, buyers stepped in and held their ground.

Chris Kimble over at Kimble Charting Solutions posted a chart of crude at support going back to 2009. Chris, who does excellent work, also posted the COT data for oil which shows what he describes as bearish sentiment data towards the commodity.

Based on what the futures are doing this morning, it appears crude is bouncing higher, keeping the above mentioned support in tact. If the deflationary winds continue then the COT data may be right and oil could end up testing the 2012 low. We’ll see what happens.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.

I hope everyone had a good weekend. I’m sorry for not getting a post up yesterday, I had a very busy weekend and just didn’t have a chance to get something posted. Today we are going to look at bull/bear case for crude oil.

During nearly all of last year there was a large triangle pattern that had been created in oil. We are currently up against the resistance area of the falling trend line that we’ve run into four previous times. As we hit this possible resistance we can also see that momentum based on the RSI indicator has broken into an overbought level which has caused trouble for crude in the past. We won’t have confirmation of stalled momentum until it breaks back below 70, until then it could very well continue higher while maintaining its overbought status.

Next up we have the Commitment of Traders COT) data on the bottom panel of this chart of oil. Looking back at the previous three highs (only the past two are visible on the chart below) we can see that large speculators had a net long position of nearly 300,000 contracts. Currently they are have just over 200,000. This doesn’t mean that oil can’t top out until large speculators net long position hits 300,000. It just means there could still be some room for oil to run while traders continue to accumulate contracts.

Looking at the red line on the chart below we have the ‘smart’ money, commercial traders. During previous peaks commercial traders have held much larger net short positions, essentially a mirror image of the net long position large speculators have held.

So while crude oil is up against resistance and might need to work off an overbought level, there appears to still be some room for it to run if traders continue to collect long contracts in the black gold commodity. I’ll be watching price action closely in the coming weeks to see how we react to resistance and if we get a false break or if large speculators follow through in bidding oil higher.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.