Tuesday, June 28, 2011

Neckline Backtest

WTI, Brent and Rbob are currently consolidating their respective Head and Shoulder neckline breaks, as could be expected.
From the Thur Jun 23 post, Brent/ Gasoline Neckline Breaks Etc.
"Word of caution; retesting the neckline ( and chopping above and around it) is common."
WTI  Active Mo. Daily
 click to enlarge

The degree of success or failure of those backtests should be watched very closely. Most likely it'll be a mixed story, but needless to say, if all three contracts have settles below  the necklines, rejecting the attempted rally, that will be very negative.
 The wave count on the move down from the Jun 1 high can be seen as possibly having 5 complete, on the other hand it has yet to have any extension, so potentially that could develop here in the (5)th, esp if it fails at the neckline.
Hourly
click to enlarge
Certainly the hourly RSI is no longer oversold.

 Brent Active Mo Daily

Rbob Active Mo. Daily
click to enlarge
Rbob doesn't  look like it's going to quite make the backtest of the neckline on the active month or August chart, though the July contract has successfully exceeded it's neckline on the settle
here.

Active Mo. Hourly
click to enlarge
Rbob DOES look overdone on the upside and the RSI is hot. It can be seen as having an  abc structure up from the lows.
The July/ August  differential is great enough to pose some challenges on the strict spot chart, i.e.
Bulls wouldn't want it below 2.80 on today's July contract but that spot chart level is JUST under the August close.



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