Near term crude oil outlook:
No change in the bigger picture, bearish view over the last few months of declines below that Aug 24th low at $37.75, "ideally" into the mid/late Dec timeframe. Note that the action from the Aug low is still seen as a correction (wave 4 in the decline from the May high at $62.58), was completed at the Oct 9th high at $50.92 (A-B-C upmove) and continues to target those new lows (within wave 5). Additionally, the seasonal chart is lower into late Dec (see 3rd chart below) and "fits" the broader view of downside/ potential final washout into that timeframe across a number of commodities (copper, silver, etc.) and commodity currencies (A$, kiwi, etc.). On a short term basis however, there is some scope for another week or so of consolidating, before resuming that decline (see in red on daily chart below, risk for short covering/jawboning ahead of Friday's OPEC meeting). Nearby resistance is seen at the month long bearish trendline (currently at $42.00/25), $4350/75 (38% retracement from the Oct 9th high at $50.92) and the bearish trendline from July (currently at $45.75/00). Bottom line: declines below the long held Aug low at $37.75 still favored, some risk for another week or so of consolidating on the way lower.
Strategy/position:
Took profit on the Nov 3rd resell at $47.92 on Nov 24th above that previously broken base of the channel from Sept (then $42.20, closed at $42.87 for $5.05 profit). Currently with new lows below $37.75 still favored, would resell here (currently at $40.97). Initially use a wide stop on a close $.25 above that bearish trendline from June to allow for further, near term consolidating. However, will want to get more aggressive on further downside and especially a break below that $37.75 low, as the magnitude of the big picture downside below there is a question (see longer term below).
Long term outlook:
As discussed above, the long held view of new lows below $37.75 remains in place. However, the magnitude of the long term declines below there is a question. Note that long term technicals did not confirm that Aug low and continue to firm (see weekly macd for example), downside momentum has been slowing over the last year and appear to form forming a large falling wedge/reversal pattern over that time. Additionally, new lows below $37.75 would be seen as the final downleg in fall from the May high (wave 5) as well as the final downleg from the Aug 2013 high at $112.24 (wave V). But as often discussed, these are just warning signs and are not a confirmation of an approaching, important bottom. So for now, the bigger picture bearish outlook remains but will be looking to reassess on declines below that $37.75 low. Key longer term support below there is seen at the year long falling support line/base of the potential falling wedge (currently at $34.00/50) and would be an "ideal" area to form a more major bottom (see in red on weekly chart/2nd chart below). Bottom line: declines below $37.75 still favored, but may be limited in the bigger picture, and part of a more major bottoming.
Strategy/position:
Reversed the longer term bullish bias that was put in place on Aug 27th at $40.00 to bearish on Sept 3rd at $48.00.
Current:
Nearer term : resold Dec 2nd at $40.97, some risk for another week or so of consolidating.
Last : resold Nov 3rd at $47.92, took profit Nov 24th at $42.87 ($5.05 profit).
Longer term : bear bias Sept 3 at $48.00 for declines below $37.75, further downside may be limited.
Last : bull bias Aug 27th at $40.00, to neutral Sept 3rd at $48.00.
No change in the bigger picture, bearish view over the last few months of declines below that Aug 24th low at $37.75, "ideally" into the mid/late Dec timeframe. Note that the action from the Aug low is still seen as a correction (wave 4 in the decline from the May high at $62.58), was completed at the Oct 9th high at $50.92 (A-B-C upmove) and continues to target those new lows (within wave 5). Additionally, the seasonal chart is lower into late Dec (see 3rd chart below) and "fits" the broader view of downside/ potential final washout into that timeframe across a number of commodities (copper, silver, etc.) and commodity currencies (A$, kiwi, etc.). On a short term basis however, there is some scope for another week or so of consolidating, before resuming that decline (see in red on daily chart below, risk for short covering/jawboning ahead of Friday's OPEC meeting). Nearby resistance is seen at the month long bearish trendline (currently at $42.00/25), $4350/75 (38% retracement from the Oct 9th high at $50.92) and the bearish trendline from July (currently at $45.75/00). Bottom line: declines below the long held Aug low at $37.75 still favored, some risk for another week or so of consolidating on the way lower.
Strategy/position:
Took profit on the Nov 3rd resell at $47.92 on Nov 24th above that previously broken base of the channel from Sept (then $42.20, closed at $42.87 for $5.05 profit). Currently with new lows below $37.75 still favored, would resell here (currently at $40.97). Initially use a wide stop on a close $.25 above that bearish trendline from June to allow for further, near term consolidating. However, will want to get more aggressive on further downside and especially a break below that $37.75 low, as the magnitude of the big picture downside below there is a question (see longer term below).
Long term outlook:
As discussed above, the long held view of new lows below $37.75 remains in place. However, the magnitude of the long term declines below there is a question. Note that long term technicals did not confirm that Aug low and continue to firm (see weekly macd for example), downside momentum has been slowing over the last year and appear to form forming a large falling wedge/reversal pattern over that time. Additionally, new lows below $37.75 would be seen as the final downleg in fall from the May high (wave 5) as well as the final downleg from the Aug 2013 high at $112.24 (wave V). But as often discussed, these are just warning signs and are not a confirmation of an approaching, important bottom. So for now, the bigger picture bearish outlook remains but will be looking to reassess on declines below that $37.75 low. Key longer term support below there is seen at the year long falling support line/base of the potential falling wedge (currently at $34.00/50) and would be an "ideal" area to form a more major bottom (see in red on weekly chart/2nd chart below). Bottom line: declines below $37.75 still favored, but may be limited in the bigger picture, and part of a more major bottoming.
Strategy/position:
Reversed the longer term bullish bias that was put in place on Aug 27th at $40.00 to bearish on Sept 3rd at $48.00.
Current:
Nearer term : resold Dec 2nd at $40.97, some risk for another week or so of consolidating.
Last : resold Nov 3rd at $47.92, took profit Nov 24th at $42.87 ($5.05 profit).
Longer term : bear bias Sept 3 at $48.00 for declines below $37.75, further downside may be limited.
Last : bull bias Aug 27th at $40.00, to neutral Sept 3rd at $48.00.
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