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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Crude Oil Bull Market Running out of steam ?

Commodities / Crude Oil Apr 12, 2005 - 12:00 AM GMT

By: Nadeem_Walayat

Commodities

After the Crude Oil bull market set a new high of 58, the market has corrected lower to 53. So where will crude go from here ?

Crude Oil Bull Market Running out of steam ?


Firstly its a little early to look for the demise of the bull market, especially since there is NO technical signal to suggest that the bull market is about to end !

Technical Analysis

1. Support -Taking the trend lines, support lies at 52.5, 50, and 45.

2. MACD - (Bottom indicator) Suggests that the correction has further to run, and will likely cross and move towards the support area just under 1.

3. 50 week Moving Average - Also suggests the correction has further to run with a move to or a break of to indicate an end to the current correction, presently at about 47.

4. Uptrend Line - This is the main support line, and is currently at 45, this being the critical support level and likely to hold any correction.

Stop-Loss - Therefore the downside risk / target appears to be limited to between 45 and 47.

Target - The Mid channel line (green) taken from the uptrend line projects 12 months forward to 67.5 (i.e. 52.5 +15). Thus it is highly likely that Crude Oil will trade at or above 67.5 at some point during the next 12 months, as long as the support at 45 holds.

As the downtrend IS still intact, it would be wise to WAIT for an END to the downtrend before considering any sort of Long position in Crude oil. One trigger that I tend to use is a break of the preceding short-term high, which at this stage lies at the previous high of 58.

Nadeem Walayat

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