Wednesday, July 28, 2010

Crude Oil Outlook

Running into a little trouble at the .618 retrace. Surprise.

click to enlarge/ sharpen
Looks a little different on the Sept.: contained by the 50% retrace. A good argument for selling out on the curve a little BTW. It does make for a very nice, classic, flat abc correction. We have spent the last 2 mo.'s trading within 6% of $75.

So is that "c" wave done here? Well it's no longer oversold anywhere. The trend line over the last 3 weeks has been taken out and has so far provided resistance.
click to enlarge
The hedge funds increased their length in the week ending 7/18, roughly between 75 and 78.
If it exceeds the .618 retrace at 74.60,  it will confirm the end of that "c" leg up, and the likely resumption of the longer term downtrend.
At a minimum, if it's merely corrective longer term, and C=A down from 79.80, it projects to roughly $60, also the 50% retrace of the longer term structure up from 32.40 to 87.15.

On the other hand, using the spot mo. 87.15 to 64.24 leg of 22.91 x 1.618 from 79.80  targets $42.74

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