Technicals | Nov 14 2013
Bottom Line 13/11/13 (West Texas Intermediate crude)
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Technical Discussion
We continue to look for a final Wave-E downside move to complete here. Yet as we have mentioned in recent reviews, Wave-E's can end up amounting to almost anything. And by that I mean, all the way back down to the significant support area basis the pattern in question, or it can just as easily pull up well short. So how are we to know ? Basically we don't know. So we have to look for technical signals that will hopefully guide us. And after last nights clear sell off, price is now right in the pocket of an area where some form of buyer support should start to surface. From a timing perspective though, the Wave-E move is clearly still only very young. So I remain unconvinced that even if we do get some form of relief rally from here, the move is very unlikely to stick.
Clearly we have strong impulsive downside price action in play at the moment. And we simply do not want to stand in the way of it. The swing lower though after last nights session down to 92.86 has bought front and centred some Type-A bullish divergence which is regarded as one of our most reliable indicators. As a minimum, potentially putting a temporary stop to the prevailing trend. And that trend is clearly down at present. So from here we start looking for buyers to start testing this weakness. To think that price levels from near on 112.00 just 10 weeks, are now floundering over 15% lower. The 50.0% – 61.8% retracement zone comes in at 96.00 and 92.30 respectively with last nights session creeping ever more close to the lower end target. So another potential inflection point that could influence price to start slowing down a little within its very strong downtrend. Fibonacci retracements tend to do that , and when combined with Type-A divergence, then the argument becomes even more compelling. Overall though, Crude Oil appears to be making a statement here. So whatever unfolds more immediately, the trend is still clearly down, and that is undisputed.
Trading Strategy
Even with some positive confluences coming together around present price levels, we wont be standing in the way of this freight train. If anything, any counter trend move if it was to unfold from around present levels, may set up a nice shorting opportunity at higher prices. Our longer term prognosis remains bullish on this market, yet that said the all important support zone just above 80.00 has to hold. So our Wave-E is doing what it should be doing as the 5th and final swing within the larger descending triangle. Its just a matter of ascertaining exactly where it is going to grind to a halt. And getting a gauge on this is likely to still be some way off just yet.
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