Crude Oil is attempting to make a base above $56

Commodities / Forecasts & Technical Analysis Oct 18, 2006 - 05:00 PM GMT

As expected Crude Oil is attempting to make a bottom after the recent sharp decline, but the quality of the bottom making process is poor, which suggests that an ensuing rally will also be poor.

Technical Analysis
1. Price Patterns & Support - The decline was strong off the 80 high, which suggests that the next up trend is likely to be weak. The key support is $56, which crude is clearly attempting to hold as a bottom.
2. MACD - (Bottom indicator) - The MACD become oversold and has made a base which is supporting current prices, although the actual price trend has proved weak.
3. 50 Day Moving Average - Is current at 66 and falling towards the 64 resistance area, which suggests a timing for a break higher could be a week or more away.
4. Trend lines - Crude all is some distance from the support trendline which mow acts as resistance at $70.
5. Time - The decline in crude time wise is one of the largest during the bull market and suggests that a retest of the high is not likely in the near future.

Conclusion - Crude Oil, is attempting to make a base above $56 for a rally towards $70. This could still take some time to form and is contingent on break of $64. The crude bull market is not looking so good given the poor quality of action between $56 and $64, as the MACD is calling for a rally, but crude is just moving sideways. Therefore buying crude at current levels for a rally to $70, carries more risk than last analysed on 10th October 06.

Buy Trigger - A break of $64.20
Target - $70 resistance area.
Stop-Loss - 50% of the high low range $64 to $57 or lower = $60.50.

Nadeem Walayat

(c) MarketOracle.co.uk 2005-2006

Disclaimer - This Forecast / Trade Scenerio is provided for general information purposes only and not a solicitation or recommendation to enter into any market position, and you are reminded to seek independent professional advice before entering into any investments or trading positions. The Market Oracle is a FREE Financial Markets Forecasting & Analysis online publication. We aim to cut through the noise cluttering traditional sources of market analysis and get to the key points of where the markets are at and where they are expected to move to next ! http://www.marketoracle.co.uk

This article maybe reproduced if reprinted in its entirety with links to http://www.marketoracle.co.uk

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.