We wrote in early August (Update 6th August) of the pressures on oil – when the market was testing the resistance at the bottom of the Bear Rising Wedge in the weekly chart. Even then we anticipated the Flag noting the ‘the coincident resistance of the parallel diagonals’ that added to important resistance at that level. Sure enough it was. Now, sixteen trading days later, the market is much lower. Yet it looks set to fall still lower.
The Technical Trader’s view:
WEEKLY CHART
The oil market looks set to go lower having completed a series of bear patterns on a large scale.
First a bear rising wedge
Second a parallel flag…
Both have completed in the weekly chart.
Flags typically occur halfway in the move…which suggests a move to the low $50s.
The detail of the parallel flag is here – cautious bears will want to wait for a break down through the two Prior Lows at $70.35 and $72.15.
More aggressive traders will watch the short-covering rally and look to sell higher, beneath the resistance that will surely be found at the lower diagonal of the Flag – currently at $74.52 or so.
Mark Sturdy
Seven Days Ahead
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