Why this low could be a bottom.

A number of factors have begun aligning with each other, offering Crude Oil an opportunity to end its two-month collapse from trading 50% higher.

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That two-month old 76.55 high had been the first breakout from the summer’s 4-month long range. The pattern had formed a Symmetrical Triangle, which tends often to break falsely in one direction, before reversing more substantially in the opposite direction. The more substantial opposing leg should be a 61.8% ratio to the false break. In fact, this week’s lows have been testing the 161.8% projection in the 49.45-50.25 area.

The target area’s test comes on a third flush-day for the leg, either gapping down sharply or plunging intraday. This third flush gapped down on Monday and only ranged sideways through the close. Strong-handed reinforcements did not arrive that day, and not since then as price continues to range sideways. RSIs have been diverging positively.

Bounce attempts out of this week’s lows can be characterized as restrained optimism — which is potentially bullish from a contrarian perspective. Meanwhile, the sideways ranging has absorbed Wednesday night’s aggressive dip to fresh lows, which previous stages would have developed into a new downleg.

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A low is not necessarily a bottom. And even one week in, a bottom won’t make itself too obvious too soon. But it’s not too soon for bounces to start chipping away at resistance which begins above 52.15, and to form an accumulative pattern that can launch a recovery. And if this isn’t “the” low, then the next lower objective would be 45.00.

The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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I developed analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. I primarily apply my technique to analyzing S&Ps, generating several round-turn candidates daily. The methodologies are also applied to other high-profile futures markets to generate an opinion and to identify specific actionable parameters. I publish my setups intraday on a blog at IfThenSignals.com, where I also host a live “charting room” webinar to graphically depict my patterns and targets in real-time.

Previously I was a Contributing Editor for optionMONSTER where I produced the Index Trader blog, providing intraday timing signals and targets in S&Ps and other futures markets. Prior to that, I founded AvidTrader.com in 1995, one of the original technical analysis web sites. Through AvidTrader, I launched the web’s first free-access trader’s chatroom in 1996 for technical analysis newcomers and experts from around the world to mingle throughout the trading day. Through the chat forum, I produced and hosted an ongoing series of live interviews with many well-known chartists and technicians. My guests included John Bollinger who created Bollinger Bands, Gerald Appel, creator of MACD, Marc Chaikinwho created the original Money Flow indicator, George Lane, creator of the Stochastic indicator, and Tom DeMark who is best known for his TD Sequential indicator. Other notable interviewees were John Murphy, Bill Williams, Peter Eliades, Linda Raschke, Van Tharp, Glenn Neely and Arch Crawford.

My analysis has been published or quoted in MarketWatch, CNBC, Minyanville, The New York Times, Trader Daily, Futures Magazine, and Technical Analysis of Stocks & Commodities, among others. I graduated Summa Cum Laude from Park University and reside in the Kansas City area.
TA qualifications: Market Technicians Association – Level 3  CMT Candidate – previous Series 7, Series 63, Series 3 holder.

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