BarroMetrics Views: Crude Oil 2015-02-10
Crude Oil is, in its current position, difficult to analyse. It has moved 60.8 points in 150 trading days without a single 18-D correction. Since 1983, this has occurred only twice previously. In January 2008, it travelled 63.1 points in 119 trading days, and in July 2008 it moved 126.6 points in 152 trading days. The subsequent 18-D corrective stats showed a price retracement of 12 to 14 points in 10-24 days. The problem is the stats are drawn from a small population, so their accuracy may be questioned.
If we assume the numbers are robust, then Figure 1 shows the current retracement price and time targets. Price wise the range is 54.00 to 58.00; time wise, Feb 12 to March 4. If I see a setup within this time-price window, I’ll be looking to take a trade. (It’s worth mentioning that the correction is unlikely to retrace to the usual 50% levels – at least that is what has happened in the past).
The initial stop will be determined nearer the time the setup occurs. What about a profit target? Figure 2 shows the range as 22.00 to 18.00. There is support at 30.00 but I expect it to give way. Crude Oil had formed a value zone after the low in 2009. It ought to have broken to the upside. The acceptance below the value are is bearish, suggesting that the 2009 low will give way.
The next support after 30.00 is the 22.00 to 18.00 area.
FIGURE 1 Crude Oil 18-D Time-Price Zone
FIGURE 2 Crude Oil Target