Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
America has Become a Police State - 19th Apr 14
Elite Herd Psychology And War By Default - 19th Apr 14
E.U. Officially Adopts the Bank Depositors Bail-In - 19th Apr 14
Goldman Sachs Is Highly Motivated To Low-Ball Gold Price - 19th Apr 14
Save MtGox - Bitcoin Important Implications of Going Down - 19th Apr 14
Stock Market SPX Topping Valuations - 19th Apr 14
Tesco Profits Panic! Back to Back £5 Off £40 Shop Voucher Promotions - 18th Apr 14
The Obama Game - Is Putin Being Lured Into a Trap? - 18th Apr 14
The Growing Threat to Capitalism - 18th Apr 14
Build Biotech Wealth on Solid Platforms - 18th Apr 14
Has Solar Power Finally Arrived? - 18th Apr 14
Bank Depositor Bail-Ins and Real Assets vs Liability-Based Assets - 18th Apr 14
10 Ways to Screw up Your Retirement - 17th Apr 14
One of Harry Dent’s Three Keys to Market Prediction is Cycles - 17th Apr 14
Obamacare Proof Stocks - 17th Apr 14
Gold, Silver And The Mining Sector: Prepare For A Severe Fall - 17th Apr 14
Hidden Australian Life Sciences Bio-tech Growth Stocks - 17th Apr 14
Disrupting Big Data Status Quo - 17th Apr 14
What the Stock Market Bears Have Been Waiting for... - 17th Apr 14
Copper Is Pathological and Suffers from SAD, but It Has Value - 17th Apr 14
Old World Order New World Order, Chaos And Change - 17th Apr 14
Even The US Government Will Abandon the U.S. Dollar - 17th Apr 14
Gold - Coming Super Bubble - 17th Apr 14
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - 16th Apr 14
High-Frequency Insider Trading - 16th Apr 14
Gold Prices 2014: Do What Goldman Does, Not What It Says - 16th Apr 14
These CEOs Will Make Investors Rich - 16th Apr 14
Climate Change, Central Banking And The Faustian Bargain - 16th Apr 14
Every Central Bank for Itself - 16th Apr 14
Social Security, U.S. Treasury Stealing Every Last Penny From Americans - 16th Apr 14
Ukraine Falling to Economic Warfare and Its Own Missteps - 16th Apr 14
Silver and Gold Miners Still Disappoint - 16th Apr 14
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Crude Oil Price Change of Trend or Just a Correction?

Commodities / Crude Oil Oct 14, 2013 - 05:03 PM GMT

By: Nadia_Simmons

Commodities

The previous week was quite hard for the oil bulls. Light crude lost almost 2% and slipped to its lowest level since July 3. When we take a closer look at the chart of crude oil we clearly see that the price of light crude remains in the narrow range between $100 and $104 per barrel. Since the beginning of the month oil bulls and bears have pushed it above or below the 38.2% Fibonacci retracement level, however, neither the buyers nor the sellers have had enough strength to win and trigger another bigger move.


At this point, it’s worth mentioning that oil bears managed to push crude oil to its new monthly low of $100.60 on Friday, after the International Energy Agency warned in its monthly oil-market analysis that the U.S. fiscal crisis could harm demand and said that supplies were rising faster than previously thought. Additionally, the U.S. government shutdown deprived investors of important data on the oil market. Some oil market indicators were not published or may not be published because the agencies that publish them are affected by the shutdown in Washington.

Taking these circumstances into account, it seems that this would be another tough week for oil investors. Therefore, in today’s essay we check where the nearest support zones and resistance levels are. Are there any technical factors that may have an impact on crude oil? Let's take a closer look at the charts in different time horizons and find out what the current outlook for U.S. crude oil is.

Let’s start with a look at the monthly chart of light crude (charts courtesy by http://stockcharts.com).

On the above chart we see that crude oil still remains above the long-term declining resistance line based on the July 2008 and May 2011 highs (bold red line). However, light crude reached the long-term declining support/resistance line based on the September 2012 and March 2013 highs (the upper black line). Despite this downward move, there was no breakdown below this line (in terms of monthly closing prices) and crude oil still remains above it.

From this perspective, the picture is bullish and the breakout above these two long-term declining resistance lines hasn’t been invalidated.

Now, let’s zoom in on our picture of the oil market and see the weekly chart. 

Looking at the above chart, we see that the price of crude oil declined once again in the previous week and dropped below the September low. In this way, light crude slipped to a new monthly low of $100.60 and closed last week below the August low. In spite of this downward move, the breakdown below this level is not confirmed at the moment.

As you can see on the weekly chart, crude oil almost reached the September 2012 top, which is a support level that may encourage oil bulls to act. If it happens, we will likely see a pullback to around $104. However, if it is broken, the next target level for the sellers will be close to $99.

From this point of view, the situation is still mixed.

Now, let’s check the short-term outlook.

On the above chart, we see that the situation has deteriorated since our last Oil Investment Update was published. At the beginning of the previous week, after three unsuccessful attempts to move above the rising medium-term support/resistance line oil bears triggered a corrective move and tested the strength of the 38.2% Fibonacci retracement level once again. The price of crude oil dropped below $102 per barrel and slipped below the 38.2% Fibonacci retracement level. Although this deterioration was only temporary and light crude quickly rebounded, in the following days we saw more attempts to move below this level. Finally, oil bears won and closed the previous week below the 38.2% Fibonacci retracement level. However, the breakout is still not confirmed.

Looking at the above chart, we see that crude oil still remains in the declining trend channel. The upper line of this channel (based on the Aug. 28 and Sept. 19 highs – currently close to the $105.20 level) intersects with the medium-term support/resistance line and forms with it a strong resistance zone. Therefore, if the buyers manage to push the price above this resistance zone, we will likely see further growths. On the other hand, the above strong resistance may encourage oil bears to act. In this case, we may see a downward move to the lower border of the trend channel (currently slightly below $100). At this point, it’s worth mentioning that in this area there is also the next support zone based on the 50% Fibonacci retracement level and the June high.

Summing up, although there was a downward move in the previous week, which took the price of light crude to a new monthly low, technically, the situation hasn’t changed much in the short term. As long as there is no confirmed breakdown below the 38.2% Fibonacci retracement level further declines are unlikely. Please note that crude oil reached the long-term declining support/resistance line based on the September 2012 and March 2013 highs (the upper black line on the monthly chart) and almost reached the September 2012 top, which is a medium-term support level, which may encourage oil bulls to act and slow further declines.

Thank you.

If you'd like to stay up-to-date with our latest free commentaries regarding gold, silver and related markets, please sign up today.

Nadia Simmons

Sunshine Profits‘ Contributing Author

Gold Trading Tools and Analysis - SunshineProfits.com

* * * * *

 

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014