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by Austin Passamonte
The wedge formations that have developed on the charts for the oil indices are about ready to break.
Position: N/A
Austin Passamonte
Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum
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WEDGE FORMATIONS
Oil Is Coiled
12/06/01 11:35:42 AMby Austin Passamonte
The wedge formations that have developed on the charts for the oil indices are about ready to break.
Position: N/A
| The way oil prices have moved around recently one would think it was pork bellies of days gone by! Or more recently the NDX, but 1998 - early 2000 is gone forever we're sad to say. |
| Back to the point, fundamental market uncertainty in the patch has driven oil prices all over the map. A recent drop to prices below $20 barrel for crude have seen gasoline and heating oil follow suit. Is it game over for "black gold" in the foreseeable future? |
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| Figure 1: Weekly/Daily Charts - OSX Oil Services Index |
| Graphic provided by: Quote.com. |
| Graphic provided by: QCharts. |
| |
| From this summer until now, Oil Services Index prices have been coiling themselves into a wedge. Which way it breaks remains anyone's guess, but a consolidation near recent lows can indeed be expected to continue the downtrend from here. Stochastic values are stuck right between oversold/overbought extremes and offer little guidance right now. Daily chart stochastic values are within overbought extreme and look rather weak at that. With price action two-thirds within the total wedge pattern formed, a break either way is imminent. We could consider going long or short underlying options (Jan 85 calls: OSX-AQ & Jan 75 puts: OSX-MO) on a break of the wedge either way. Schlumberger is also a main component of this index and would be an excellent proxy to game with shares or underlying options as well. |
 Figure 2: Weekly/Daily Charts - XOI CBOE Oil Index Graphics courtesy of Qcharts @quote.com We see a similar, unclear pattern in oil stocks index as well. Wedges here are getting close to breaking and stochastic values remain bullish for now but incongruous across both time frames. A mutual alignment in one extreme or the other as price action nears one side of these wedges gives us a better than average guess on which direction lies next. That's the watch we're currently on. |
| Make no mistake: oil prices will soon flow strongly one way or the other. Opportunity to profit in stocks, equity or index options and/or futures contracts is setting up and the spigot will open when chart patterns break! |
Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum
| Title: | Individual Trader |
| Company: | CoiledMarkets.com |
| Address: | PO Box 633 |
| Naples, NY 14512 | |
| Website: | coiledmarkets.com/blog |
| E-mail address: | austinp44@yahoo.com |
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Date: 12/11/01Rank: 3Comment:
Date: 12/24/01Rank: 3Comment:
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