Crude Oil Completes Per Expectations

Lindsay Hall  |

Futures Outlook for the Week of 4/15/13:

As I look through the charts for this upcoming week, the metals continue their decline with strong bearish charts.  (If you hold them in physical form, I have to ask: “Have you thought about utilizing options to offset a bit of this downward momentum should it continue?” We can help you with that.) Our markets right now show a lot of mixed charts that are not all that inspiring.  As I am not über passionate about our charts today,   I will follow up on our discussion of Crude Oil from last week.  Crude Oil has not only completed but exceeded the completion level for the head and shoulders pattern that was developing last week and in so doing has tested below our $90 mark.

Crude Oil

Last week I mentioned: “The 90-100 territory still sits as our trouble area and one that we need to break from, but now we are forming a head and shoulders pattern on the daily chart.  If this comes to completion in the near term, we may see a $3-4 drop in crude to test the 90 territory.”

This Daily Chart was the chart that I posted in last week’s article as I talked about the potential development of a head and shoulders pattern.

This next chart is our Daily Chart as of this morning 04-15-13:

You will notice that we not only completed the head and shoulders pattern, but we also exceeded it to test a bit below that $90 boundary as per last week’s expectations.

Last week I also mentioned that the completion of this pattern could result in the beginning of a break of the triangle formed on the Weekly chart and we are starting to see this happen.

This could be a head fake, but our momentum here should not be denied.  The Weekly chart now becomes our central focus once again.

When moving into the Monthly chart, our larger pennant type formation still holds as does the next major support level.

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Per last week: “My thoughts from the last article still stand. “From a big picture perspective your psychological levels that Crude has traded between for almost a year are $100 and $75.  If you are looking for a long term play, then one of these territories needs to be broken well.” We still show a type of pennant formation which tends to be bullish…Should the head and shoulders break on the Daily chart you will want to keep an eye out for the mid 80’s as a secondary support level and then of course the 75 territory.”

Now, of course, we have had the head and shoulders pattern break on the Daily chart and we should look now to the mid 80’s as minor support and then keep an even more important eye on the $75 level.  Per the chart above, Crude Oil has not truly broken the $75 mark well in more than two and a half years.  To break down the $75 mark well would be interesting indeed.  Should Crude Oil fail to break this level, however, we simply remain bound by the larger psychological levels that have plagued Crude for the past couple of years $75-$100.

We sit now in a position where the Daily chart has performed per its potential and the Weekly chart becomes imperative.

For those of you, who may want to explore the Crude Oil market without “going all in” so to speak, consider utilizing Options to dip a toe in this market.  We focus on utilizing Options on these Commodities in order to lessen capital outlay and we use fixed risk strategies that allow you to rest at night knowing exactly where you stand.  You should be prepared for the appropriate actions should these markets start to shift.  We are here to make your options clear!

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