Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18
Stock Market - This Time is Different. Really?! - 13th Feb 18
Gold and Silver Long-term Buy, Short-term Sell Signal - 13th Feb 18
SPX Futures Are Sliding... - 13th Feb 18
Stock Market Topping Process Begins. The Bubble Finds its Pin - 13th Feb 18
Math Behind the Stock Market Crash and What’s Next – PART2 - 13th Feb 18
Gold Stocks Groundhog Week - 13th Feb 18
Platinum Looks Poised for Surprising Gains This Year - 12th Feb 18
Friday's S&P 500 Stock Market Bounce To Continue, But Selling May Resume - 12th Feb 18
The Inflation Trade and Bond Yields Rising Result in Equities Correction - 12th Feb 18
February 2018 Stock Market Crisis – What Next? - 12th Feb 18
How To Profit From The Bitcoin Bloodbath - 12th Feb 18
The Philippine Economic Dream Could Be Within the Reach  - 12th Feb 18
Is the Stock Market Correction Over? - 12th Feb 18
What Does the Stock Market Decline Mean for Gold - 12th Feb 18
Addicted to SMIGGLE Mega Review, Pencil Cases, Stationary, Back Packs, Drinking Bottles, Toys... - 12th Feb 18
Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - 11th Feb 18
The Fed’s Impossible Choice, In Three Charts - 11th Feb 18
US Stock Market, Gold, Silver and the Macro Backdrop - 11th Feb 18
After Two weeks of Stock Market Decline, People Are Ssking, “Are We There Yet?” - 11th Feb 18
How to Grow Tomatoes From Seeds, Homegrown Organic Money Saving Gardening - 11th Feb 18
Youtube KILLS ALL Small Channels with New DeMonetization Rules - 11th Feb 18
Lot of Stock Market Damage to Be Caused before New the Fed Chief Will React - 10th Feb 18
Best Ways to Make Money - 10th Feb 18
Stock Market Selling Unleashed! - 10th Feb 18
How to Get Free Youtube Subscribers to Get to 1000, YTpals, Subpals, SubmeNow, Do they Work? - 10th Feb 18
Stock Market Buy or Sell? This Insight May Help You Decide - 9th Feb 18
Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - 9th Feb 18
What Is Stock Market Volatility Telling Us Now? - 9th Feb 18
Crude Oil $100 Price in 2019? - 9th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

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.


© 2005-2018 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

6 Critical Money Making Rules