It’s time for a look at crude oil futures. It seems to have a good chart lesson every other day, and the weekly crude inventory reports from the EIA are out tomorrow morning. Let’s see what it’s up to.
The daily chart for the January Crude Oil futures is below. When I wrote about it last (see here), it bounced off support around 77.20. Yesterday saw an attempt at a rally, but its inability to reach the upper trend line indicated the bears were gaining the upper hand. The doji bar indicated that the odds were good for a directional move today. In addition, the ROC indicator (bottom panel of the chart) indicated today was a Taylor Technique “Sell Short Day” today. (For more on the TT and swing trading go here.)
Today has seen a break of most of the near term support for crude oil futures: it broke the multiple low support around 77.20, trend line support at 76.96, and the 11/13 swing low at 76.27.
Looking forward, I’ll watch for a close under the support areas listed above for a sign that the selloff will continue, targeting the Fibonacci retracement support at 74.34. Regaining the old low at 76.27 takes some of the heat off, especially in light of tomorrow’s inventory report.
From a Taylor standpoint tomorrow could be a buy day (it’s best to think in terms of probabilities; there’s no sure things). ROC is not down to a level to give a decisive buy signal. On a buy day, we’ll initially be looking for some soft of test of today’s low, currently at 75.60. Additionally, remember the tendency for crude to make a directional move after the inventory report. It’s usually worthwhile to approach inventory report days with an open mind.
Will it regain support?
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
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