Monday, January 2, 2012

Crude Oil (CL) Weekly Outlook/Strategy (01/02/12 - 01/06/12)

Happy New Year! Hope everyone had a safe, fun celebration over the weekend. Frankly, I can't say that that I have a great read on crude oil going into 2012. Many traders, I'm sure, have the potential Iran situation on their radar. I cannot trade off that information so will keep it in mind but try to to remain objective in my analysis of the technical situation. 

Weekly: The weekly chart of crude continues to give a lot of mixed signals. Kumo has continued to contain price along with the lower rail of our prior upchannel. We have a rising 10-wk MA and tenkan-sen, which are both above the 30-wk MA and kijun-sen.

If/as price continues to hold these levels, our bearish kumo will soon flip bullish and chikou will definitively be able to clear previous prices. I will not rule out the possibility of extended and continued choppy/trendless action from here.

Daily: the trend (as shown by the kumo) is decidedly higher. MACD has bounced off its centerline and RSI is holding in bullish territory. However, the flat tenkan-sen is below a flat kijun-sen and these should act as magnets for future price action. 

I am sure many have been watching the flag/channel that was forming over the past weeks. I believe that pattern is most likely going to morph into something else. Zooming out a bit, we see the potential for a large inverted H&S pattern with a left shoulder beginning in May and currently forming a potential right shoulder.

From a shorter term perspective, we made a lower low and a potential lower high last week. This is something to be aware of if we are to see a potential trend change here.

240 minute: Here we can see our potential right shoulder I discussed above. Within our right shoulder, we see the potential for a continuation inverted H&S fractal. We've seen continued choppy action from this timeframe and signals are mixed. Chikou has fallen below prior price levels, flat tenkan-sen is below flat kijun-sen with current action below both levels.

The two key pivots beneath for me are shown. I believe the 97.50 area will be very important. Above this level I am bullish, and willing to buy the first test of this area as well. The next important pivot will be 95.20 area. Below this, I am a full blown bear.

We also have a potential neckline of our potential H&S which I would get long on a break

60 minute: We are a bit more bearish on the shorter term timeframe. From an ichimoku perspective, all signals are currently bearish with the exception of kumo flipping bullish. We are sitting at potential trendline support. Resistance levels on this timeframe will be at the 99.87 area then 101.40. Support once again, 97.50 then 95.15.

I would like to wish everyone the best of luck and success in 2012. I will try to continue to share my weekly research. Please let me know if you find this at all useful or even disagree and have a different perspective. Thanks for reading.