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Oil: Dicey Pattern

Monthly time frame:

  • Oil must reclaim the 2009 low must be reclaimed in order to at least allow an oversold rebound
  • Below the 2009 low we have 2 support areas at 24.44 and 17.18 prior to the 1986 low at 9.75

Crude Oil Monthly Chart
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  • In the following monthly chart we can see that maybe Oil is forming a "Bullish" Falling Wedge
  • If the 10 mma = 44.86 is reclaimed then the trend could shift from bearish to bullish

Crude Oil Monthly Chart 2
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Weekly time frame (March future contract):

  • Within the suggested wedge of the monthly time frame (Blue converging trend lines) there is a smaller one (Black converging trend lines)
  • The pattern of the smaller wedge is quite tight hence a resolution should be imminent
  • If the resolution is bullish I would expect a sharp move to the upside
  • Above the upper black trend line we have R1 (10 wma) at 35,72; R2 (Blue upper trend line and 20 wma) at 41.46 then R3 (50 wma) at 50.45
  • If the resolution is bearish we shall see if the lower trend lines hold

Crude Oil Weekly Chart
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  • Weekly oscillators are displaying a positive divergence of the RSI and MACD but a bullish signal cross of the MACD is needed in order to increase the odds of a tradable bottom

Crude Oil Weekly Momentum Chart
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Daily time frame:

  • At first sight it looks like the January 3-wave up leg is a failure. Price has been rejected three times by the upper converging trend line and last Friday price has dropped back below the 10 dma and the 20 dma.
  • The pattern is certainly dicey
  • Now we have to pay attention to the trend line that connects the January 26 and February 3 lows. If the trend line holds a break out of the wedge would be possible while if it does not hold Oil will probably establish another lower low

Crude Oil Daily Chart
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  • Daily oscillators are poised for higher prices ahead if the RSI(14) reclaims the 50 line given the MACD bullish signal cross.

Crude Oil Daily Momentum Chart
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60 minute time frame:

  • Above I mentioned the critical significance of the trend line that connects the January 26 and February 3 lows. This trend line can belong to a bearish or a bullish pattern:

a) Bearish Pattern: Head & Shoulder with a measured target at 24

Crude Oil 60-Minute Chart
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b) Bullish Pattern: Triangle with a measured target at 38

Crude Oil 60-Minute Triangle Chart
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