Drilling Range For Crude Oil Futures

05/11/10 12:03:29 PM

by Austin Passamonte

Here's a market outlook for the crude oil futures index.

Security: CL
Position: N/A

Crude oil has the unique distinction of being a consumable commodity product and a quasicurrency market in rather equal balance. The effects on crude oil pricing are part supply/demand and part US dollar value offsets.

FIGURE 1: CRUDE OIL FUTURES, DAILY

Graphic provided by: TradeStation.

That being said, crude oil futures have generally rolled through a sideways range from roughly $74 to $86 per barrel since October 2009 with brief blips outside either extreme (Figure 1). The recent power dive that sent crude prices $13 bbl lower inside of five trading sessions spanned the entire range. We can see where the 74+ mark served as low zone supports in December 2009 and February 2010 before popping to subsequent highs each time. We'll see how this trip resolves itself, accordingly or otherwise.

FIGURE 2: CRUDE OIL FUTURES, WEEKLY

Graphic provided by: TradeStation.

Dialing out to the weekly chart view (Figure 2), the same sideways channel shows clear persistence dating back more than a year. Meanwhile, vertical trendlines of support can be seen from bottom lows to higher-swing lows along the way. Both levels were broken on a weekly close basis and now appear to be overhead resistance until proven otherwise.

FIGURE 3: CRUDE OIL FUTURES, DAILY

Graphic provided by: TradeStation.

Back inside the daily chart for CL (Figure 3), we see a bearish head & shoulders formation with crown to neckline roughly $7 in width from 89 to 82 levels. That projects $7 down from crown to low objective or about the $75 mark extended. Bottom of the channel dating back for a year is the bottom of the H&S pattern projection. There is a sticky magnet near the $75 zone. If CL continues to trend lower from here, look for that clustered magnet zone of prior support to then become equally strong resistance.

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

Title:	Individual Trader
Company:	CoiledMarkets.com
Address:	PO Box 633
	Naples, NY 14512
Website:	coiledmarkets.com/blog
E-mail address:	austinp44@yahoo.com
Traders' Resource Links
CoiledMarkets.com has not added any product or service information to TRADERS' RESOURCE.

Click here for more information about our publications!

Comments

Date:�05/11/10Rank:�5Comment:�

PRINT THIS ARTICLE

Request Information From Our Sponsors

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

Comments or Questions?	Article Usefulness
	5 (most useful) 4 3 2 1 (least useful)

TECHNICAL ANALYSIS

Drilling Range For Crude Oil Futures

Comments

SUBSCRIBE TO OUR FREE EMAIL NEWSLETTER!

SUBSCRIBE TO OUR FREE
EMAIL NEWSLETTER!