Sunday, January 15, 2012

Crude Oil (CL) Weekly Outlook/Strategy (01/15/12 - 01/20/12)

Towards the end of this week we saw an awesome intraday reversal, with a great trade to be had on Friday. The thinking is that we will be back into "sell the rips" mode from here.

Weekly: We continue to see those topping candles on increased volume each time we near channel resistance. Some divergences are now appearing on the RSI and MACD histogram. Tenkan-sen has acted as support but is now flat. A break of our uptrend line would be significant here.

The action at these levels is most definitely not what I'd consider bullish. It appears to me that we may eventually head back to the low 80's if not lower.

Daily: As I've written about previously, I believe the 97.53 area is HUGE as a pivot. From a daily perspective we neared broke our trendline, this past Friday, but bounced off our kumo and pivot area. Significant negative divergences appear on RSI/MACD, with MACD rolling over and a bearish centerline cross imminent.

Chikou has fallen below prior price and tenkan-sen is now heading lower. I will re-emphasize the importance, in my opinion, of that 97.53 area. Below you want to be bearish. Regardless, I do not believe a breakdown here will be easy. As thick as the kumo is, expect some backing and filling before we are to see any sharp downside moves.

240 minute: The 4 hour timeframe shows that we managed to hold our uptrend line on Friday. A break through this level gives the go-ahead for a short trade with confirmation coming on a move below 97.53 (denoted by pink line). Near term resistance should be found at 100.50 - 101.00 area.