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TECHNICAL ANALYSIS


Crude Cruise

08/14/09 10:53:06 AM
by Austin Passamonte

Measuring the long-term view of crude oil futures market.

Security:   CL
Position:   N/A

In retrospect, the 2008 peaks of $140-plus per barrel crude oil (CL) prices from the levels which they rapidly rose was blatantly unsustainable. It was not a matter of if they would correct, but only from where and when. The subsequent plummet to sub-$40 prices in early 2009 was equally unsustainable. Somewhere in the middle of that $100-span barrel price range lies fair value. But where?

FIGURE 1: CRUDE OIL FUTURES, WEEKLY
Graphic provided by: TradeStation.
 
Since the peak lows earlier this year, price action has stairstepped upward to the $70 zone. We see where the $75 area that was hit was a three-week pause late last year, and served as the recent double-top test this summer. Barely above that is the +162% projection off the initial 1-2-3 lows ascent.

CL may hang around and bang around the $70+ to $80 price zone for a while. Crude oil futures need to drain off sell-stops clustered on the lower side of congestion and begin tapping into the buy-stops clustered above. Yes, those stops are clustered there, and the marketplace itself exists to find and test them for validity.

It is no real coincidence that the upper levels of 233% and then 377% Fibonacci projection measures happen to overlay prior congestion zones. The CL $90 zone and the $115 zone (give or take a $1pbl) are the magnetic attractions. We could and probably will see crude oil prices testing those levels in the not-too-distant future. From the high $70s to high $80s and then $115 or so are the stepping-stones above. Retracement to the $60 levels should find firm footing below.



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

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Date: 08/16/09Rank: 5Comment: 
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