Thursday, May 12, 2011

Crude Oil Update

Do we have a count down of 1 and 2 complete, with 2 ending late May 10th at 104.66 ? This is important because if the move down is a 3, it likely will accelerate, potentially extend, and certainly will pound through the lows to the next support area.

The rally up did stop at the 50% retrace of the whole move down, which is supportive of the argument  to label that move down "1".  I had originally thought it might be -1- through -3-.  Using the -1- through -3- count it retraced .618 of the -3-. A very deep and unusual retrace for a -4-. The question on the labeling arises from the slightly confused action immediately following the 114.80 high.

For now I am going with count of 1 and 2.
Active Mo. Daily
 click to enlarge

If we ARE in a 3 down then it can be expected to equal or very  probably exceed the 1 by a Fibonacci multiple; 1.382 or 1.618. If it is equal to the 1 then it puts it around 84, testing the "b" low of Feb.15th.
Naturally any multiple of 1 takes it out, painting a really ugly picture for any bullish holdouts.

Shorter term what does the move down from the 104.60 level look like?
Active Mo. Hourly
 Note the positive divergence on the 14 RSI, not as pronounced as May 6 low.
There is also a .618 Fib extension relationship at this mornings lows.
Could easily see a -2- up, and the 50% retrace is 99.93, near the overnight high of 99.72.

With the margin increases and political heat, it seems unlikely that a quick resumption of the rally is imminent.  Longer term downside risk is about as high as it gets, see Crude Oil Targets



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