Technicals | Nov 12 2014
Bottom Line 11/11/14
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 75.00 / 69.28
Resistance Levels: 80.00 / 84.08 / 88.90 / 94.46
Technical Discussion
'… if 70.00 can hold, we stick to being optimistic that a major breakout higher is what is going to eventually unfold.' Our position on this remains the same yet with Crude Oil (West Texas Intermediate) prices not having closed a month out lower than 70.00 USD since 1999, the seriousness of such breakdown cannot be overstated. For now, our bullish longer term rhetoric is being severely tested. It appears OPEC is in no hurry to cut output even though this price slide has been very strong over the past 4 months off the 104.00 highs. Yet producers are resisting calls to reduce supply, and Libya is also looking to start production again at two Oil fields this weeks which is only going to exasperate this immediate glut in the market place.
Reasons to remain neutral (bearish below 70.00) :
→ surplus conditions globally continue to weigh on price
→ global geopolitical unrest remains yet is having little effect on price
→ longer term basing pattern overall looks bullish eventually so long as 70.00 holds
→ any close below 75.00 (new contract) is an initial early warning signal
75.00 – 80.00 (on the immediate contract) is the support zone we are now keeping a very close eye on with an initial red flag waving on a break that sticks below 75.00. That said, below 70.00 remains the critical line in the sand as stated above. Price is once more right at the bottom of the longer term range which keeps things neutral, yet only just. Ever since price dropped below the 200 day moving average, volume has increased which has added to the bearish flavour of the move. Last night was not a good look either via a key outside reversal day to the downside. We don't place a great deal of emphasis on these one day technical factors, yet on top of everything else, there is certainly nothing positive about the move. On the flip side is the fact that demand has surfaced in the past right in this price zone, plus the recent swing lower has bought forward some quite strong looking Type-A bullish divergence. Yet it has yet to trigger to this point. Continue to approach with caution.
Trading Strategy
We have lent on the support zone and the bullish divergence and recommended a trade for aggressive traders at 79.36 which in between reviews has been triggered. Stops below 75.84. Conservative traders continue to stand aside.
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