TheOnlyVince
Long

Technical bounce due on oil?

NYMEX:CL1!   Light Crude Oil Futures
Oil             is not my primary area of expertise and i know that currently the fundamentals are clearly bearish after that the OPEC countries agreed this afternoon not to cut their oil             production to lift oil             prices. As a result oil             prices tumbled to post fresh lows below 70$. However looking at the long term picture, we'll notice that the price of oil             is now testing/dipping below the 200 periods monthly EMA for the third time since the year 2000 (indicated on the chart).

Is oil             price due for a technical bounce?

Now that we know what's the position of the OPEC countries regarding the oil             supply and that it was rather expected already, we can infer that most of the move is priced in (audacious statement!). Let's assume part of it is priced looking at the chart the next key technical support is found at 56.90$ and the stochastic oscillator is deeply oversold hence limiting further downside potential. It could be interesting to play a bounce at 60$ hoping that this bounce doesn't transform itself into a falling knife... The first realistic target should be found at 70$. This trade remains highly speculative to my eyes but I still wanted to share this observation with the community.

Entry@60$
SL@57$
TP@70$

Thanks for the post, very informative. What's SL? Is that a stop loss level or a support level?
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In 2001 and 2009 CL dropped to 75% of the 200 Month EMA or $51 in 2014. The up trend line connecting the lows from 1999 linear chart comes in at 47. So I am seeing crude finding a bottom around 45 to 50. As far as timing, in 1999/2001/2009, the lows hit in dec and jan...so a bottom in the next 2 to 6 weeks around 45 to 50.
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Really interesting comment thanks Mike. I'll follow up on it.
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dp mikekatbi
Interesting, Mike. Thanks!
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Mickette mikekatbi
Here my technical chart analysis Mike
snapshot
P.S. Most of the time I´m acting on the Saxo´s trading community
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