Monday, January 30, 2017

Crude Set Up

Crude is set up to cause a lot of pain. Fridays COT revealed further increases in spec net longs;  NYMEX+ICE WTI  +24 million bbl to 396 million bbl, bringing it up to near record levels.
 March WTI, meanwhile, has been pretty much going sideways in a choppy manner.

5 day chart
click to enlarge

1 Mo.
click to enlarge
While it is possible that this pattern is going to break up in the short term, all the spec length will make heavy work of it. This chart shows no evidence of any impulse wave action to the upside and in fact the pattern is more likely a consolidation of the move down from 56.18 to 51.59

 6 mo.
 click to enlarge
If WTI breaks down on the other hand, putting in lows under the .382 retrace at 51.78, the next Fibonacci support levels will get tested as the weak specs run.

The more interesting question is, will the 26.05 low get tested, or is this structure up from 45 going to have another leg after shaking out some length.
3 yr. chart
click to enlarge

Note the long term negative divergence on the RSI. 
 If this is an abc structure up from 26.05,  c = 50% of a. 
Considering the length in the market, it's going to take some doin' to make new highs.




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