Crude Bears Lower the Tone
25 June 2009
We have been bullish in Crude Oil for some time now, but recently started to look closer for evidence of a temporary pullback phase – particularly after the market had reached a certain Fibonacci projection level. This correction is probably now underway.
WEEKLY CHART – CONTINUATION:
On the continuation chart it was a break above 50.00 (area of the major Jan-07 low) that gave an initial bull signal.
The recovery has nearly retraced to the 38.2% level around 76.30, but a dip is expected before this is tested.
DAILY CHART – AUG-09:
A medium term base eventually completed in May – in some respects we have been waiting for a post-break pullback.
We had a Fibo projection at 74.50 which was almost reached (but marginally exceeded on the Jul contract). This is related to the fact that the 76.4% pullback level neatly coincides with the 50.76 21-Apr low (see US Dollar Index 11-Jun Update for further detail of method).
In the Commodity Trading Guide we said we didn’t expect a deep slip back. Two possible support areas are
the 38.2% level which currently combines with a projected channel base
the 50% level which combines with the 58.71 Apr high, with rising support and falling return line just below, near 57.00.
At this stage it is unclear if the higher, 38.2% support will hold or not. Buyers on dips will, in any case, likely favour entry at/above 59.00, with initial stops nicely below that falling return line (57.00 and falling). Partial profits probably targeted towards the 73.90 11-Jun high.
Next story:
EUR/CHF Springs to Life from Key 1.5000 Support 
Previous story:
The UK Gilt Market looks vulnerable at these better levels