Market Technical View is a blog that mostly concerns the technical analysis of different financial instruments like indices, commodities, stocks, ETFs and currencies.

All the posts are structured in 3 main chapters that can be found in Content, in the upper right-hand corner of the blog.

Market perspective. The technical approach consists of chart patterns and important support/resistance zones. The purpose of this section is to give directions of the price on short and medium term (a few days up to a few months).

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Thursday, October 6, 2011

Crude Oil (WTI) Technical Analysis 2011.10.06

Rising wedge on Crude Oil

As I expected, the price action around the bottom zone in Crude Oil ($75.30-$77.00) was bullish for yesterday and this morning, as the price hit the T1 trend line a few hours ago.

The first resistance of the previous analysis ($79.60) is now a support but this level is important as the price oscillated around it for a while. The question is now if the buyers have enough strength to break the T1 trend line without any significant correction.

The most recent price action can be defined as a rising wedge that usually breaks down. One other important fact is that we can spot a 5 wave move from the bottom that could mean the end of an impulse. If this will be the case, we are at the beginning of a longer up move(this being wave 1).

On the 4 hour chart the bigger picture shows a clear down trend that reversed from the previous lows area. The rally came up to the 61.8% retracement level that is in the same area as the T1 trend line (this is resistance).
One other reversal sign (to the downside) is that the stochastic oscillator shows an overbought market in a clear down trend.

Bottom line: there are more evidence that indicate a reversal towards the down side and, therefore, I expect that this area will form a reversal point. 

However, there is no such thing as a 100% scenario; that's why we can expect some more signals that indicate a trend resuming.

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