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Crude Oil Bearish Outlook

Commodities / Crude Oil Aug 27, 2010 - 04:58 AM GMT

By: Seven_Days_Ahead

Commodities

We wrote in early August of the pressures on oil – when the market was tested the resistance at the bottom of the Bear Rising Wedge in the weekly market. Even then we noted the ‘the coincident resistance of the parallel diagonals and the lower
diagonal of the wedge above the market’ which suggested important resistance at that level. Sure enough it was. Now, sixteen trading days later, the market is much lower yet looks set to fall still lower.


The Technical Trader’s view:

WEEKLY CHART

The oil market looks set to go lower having completed a series of bear patterns on a large scale.

First a bear rising wedge

Second a parallel flag…

Both have completed in the weekly chart.

Flags typically occur halfway in the move…which suggests a move to the low $50s.

DAILY CHART

The detail of the parallel flag is here – cautious bears will want to wait for a break down through the two Prior Lows at $70.35 and $72.15.

More aggressive traders will watch the short-covering rally and look to sell higher, beneath the resistance that will surely be found at the lower diagonal of the Flag – currently at $74.52 or so.

Mark Sturdy
John Lewis

Seven Days Ahead
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© 2010 Copyright Seven Days Ahead - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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