FinancialMarkets Crude Oil has peaked again at $33. Time to fall to $25?
Crude Oil is at an interesting point now.
Check out the daily chart above, you will see I have several Support and Resistance lines which indicate some key levels of activity for Crude Oil (WTI).
Similar to when crude oil was at $25, the price is moving sideways for a few days at this key resistance of $35-$33. It is quite clear we will have a break away from here, either upwards heading towards the $40 mark. Or a much needed correction downwards back to $25.
Before we move on, admittedly I got this analysis totally wrong which I wrote on this blog: http://financialmarkets.club/trader-blog/crude-oil-ready-to-slump-again-for-june-contracts
I am still perplexed how I got this so wrong, as there should have been an immense oversupply and storage problem for June contracts which were expiring on 19th June. The question remains – where did all that oil go? It seems to have disappeared somehow.
Interestingly enough, the EIA report yesterday on 28th May, showed a 7m barrels increase in inventory, compared to around 1m increase the previous week. How on earth does inventories jump like this? Or are they releasing the oil that was “supposed to be in the market for 19th May”, into the market slowly, in order to protect the oil price? Whatever the case, I have a strong feeling there is a lot of market manipulation going on.
So moving on, lets zoom into the Oil chart on an hourly basis and see what is going on to get more direction on which way the price is likely to break out.
Zooming in and looking at a 4 hour chart we can see what is going on. We see to have a TRIPLE TOP CHART PATTERN forming, coupled with strong technical divergences from MACD and RSI, this looks pretty well set to decline, taking WTI Crude Oil down to $28 at least, from the current $33.
We should find this timing coincides with the increased inventory, China political tensions and a bit more. Remember oil has been moving sideways (again) for a reason… that is the market is waiting for more direction from fundamentals/news.
However I don’t think $28 is a strong enough support, thus we could see it settle at around $25. At this level we should wait for more direction.
I could be wrong again, and this may just break upwards, with some careful market manipulation on the government level, this is very possible, so I wouldn’t take any naked short positions. Be sure to have a hedge in place.
Good luck and Trade Safely and Responsibly.
Oil
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