An Interesting Time II – Crude Oil

BarroMetrics Views: An Interesting Time II – Crude Oil

Yesterday we had a look at the AUDUSD; today we’ll have a squiz at Crude Oil.

Figure 1 is a long-term logarithmic chart of monthly cash crude since 1859. The spike down from the 2007 high can be viewed as a test of the retest level of the breakout at 39.50.  On the retest, Crude did get to 30.81 but the market did not accept below the Primary Sell Zone of 39.50 and 10.40 so we can treat the move from 146 to 30.85 as a correction.

The highest probability  scenario is a sideways price action between 146 and 30.

Figure 2 shows retracement levels based on the CSI-Data Perpetual Series. We are at the 33.33 retracement level and given that the 13-week (quarterly trend) has not had a pullback since the December 08 low, I expect to see one this month.

Figure 3 shows the current price action on the 18-day (monthly trend) and 5-day (weekly trend).  We have an Upthrust Change in Trend pattern (see Nature of Trends) from up to down. The signal will be invalidated on acceptance above the Maximum Extensions at  77.45 (basis Perpetual Contract, see Figure 4).

Now to the current action: yesterday (Sept 10) was a bearish day for two reasons:

  1. Volume was normal but the range was small. The fact that it was an inside day suggests a ‘go with sell signal’ on acceptance below 70.85. Acceptance in this case would be acceptance in a 60-minute chart and would mean the same as acceptance beyond the Maximum Extension (see The Importance of The Maximum Extensions).
  2. Crude has a high correlation with the S&P at the moment. The fact that the S&P made new reaction highs on reasonable volume without Crude following suit is bearish for both the S&P and Crude. It’s true that sometimes Crude lags the S&P move by 24 hours so tonight will confirm or reject the validity of the S&P move.

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FIGURE 1 Cash Crude Oil

Chart through the courtesy of TheChartStore

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FIGURE 2 Crude Oil Perpetual

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FIGURE 3 18-day and 5-Day Crude

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FIGURE 4 18-day and 5-day Crude

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