Tuesday, September 18, 2012

Crude Oil intraday technical analysis - the downside prevails

The Sweet Light Crude Oil futures (Oct.12) intraday chart doesn't seem very bright today. Yesterday was a black day for this market as it lost $3 in just one minute after a sharp sell-off occured. Lots of rumors circulate - fat finger, technical glitch, coordinated manipulation, etc.Whatever it is it made it's mark on this already choppy market and it's getting harder to read the intraday chart and look for direction.
The price currently resides at 96.10 and from here we may continue to see choppiness in both directions in the short term between 98.70 and 94.20. Intraday pivot is 98.70 and as long as price remains below it I will remain bearish. My preference for today will be short positions below 98.70 targeting 94.4. However, such a sudden drop created a cheap supply that may be viewed by many traders as a good opportunity to buy so I wouldn't rule out the possibility for the same sharp bounce to the upside.
Pivot: 98.70
Support: 94.20
Resistance: 98.70

Notice the Head and Shoulders pattern formed on the H1 chart (the red circles on the first chart). It usually marks a top and is considered a reversal signal after a strong bulltrend. Now take a look at the daily chart(the second chart I posted) - I have marked 3 important bearish signs - RSI divergence, bearish candlestick engulfing and ex-support now turned resistance that held at 100.65. The major trend is still bullish but with so much bearish signs I'm looking for a change in the trend in the medium term.
In conclusion: quite mixed picture today as both sides can be played but tight risk management and timing should be applied strictly.


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