Futures Outlook for the Week: Crude Oil Update

Lindsay Hall |

crude oil offshore drillingI have written on the topic of crude oil a few times, but charts again demand some attention for what might be coming next.  Crude Oil has some very interesting chart patterns on all three major charts including the Daily, Weekly, and Monthly.  I want to highlight the positioning of Crude so that you can be ready for it when it breaks.

Crude Oil

The last time I wrote about Crude Oil I spoke about the short term range between 90 and 100.  We are still sitting in that range after once again making a run up towards 100 and finding failure from that resistance level.  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.  The question then becomes “Will 90 hold for support as 100 did for resistance?” If 90 does not hold, then we might easily find ourselves trying to wander down towards 75 again.

Continue to watch and see if we get the fail on the Daily chart and whether or not our near term range manages to contain Crude Oil pricing again.

When you move on to the Weekly chart, I want you to look at both the chart from the last article involving Crude and the chart from today.  You will see that our triangular pattern still exists and is a little more developed at this point.  We are tightening up even more and at this point with yet another test up around 100 and a failure that was not as deep as the last, we may be looking at a potential for an upward break instead of a break downward.

Crude WTI May 2013

Last time I wrote on this topic I mentioned that the Weekly chart was the most important chart to me at the time.  Right now, the Weekly chart is imperative, but the completion or lack thereof on the head and shoulders on the Daily chart may be what makes or breaks this weekly triangle.

Now, let’s take a look at the Monthly chart.

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, but this time I have highlighted for you some of the near term ranges that need to be pushed before we can truly have a decision on direction.  As mentioned earlier, the range between 90-100 is an important near term territory where we have been stuck for weeks on end.  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.

Right now the Daily chart is paramount as it has the power to push both of the bullish patterns on the longer term charts either in the direction that they desire or destroy them with a bearish play if the head and shoulders not only completes itself, but allows for a true break of support.

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!

For more information or for daily assistance with the Options market on Commodities and Futures, visit www.rmbgroup.com or click here to get started today. Read disclaimers here.  

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