Take a look at the included weekly longer term chart of Crude Oil. The drawn red line shows the uptrend line since February, that was broken to the downside a week and a half ago. Technically, this could be the beginning of trouble for the uptrend in crude oil since earlier this year. What we always try to determine in technical analysis is if this major trend line break just means that the angle of ascent in crude oil is beginning to change to a slower long term rise, or if this is a major trend change.
Notice also that I drew a blue trend line that connects the July and October lows. Crude Oil prices are now trading just below that trend line right now and right on top of the 40 week exponential moving average. On top of this, the bottom chart shows that the weekly directional movement indicators have crossed to the bear side as the red line is above the green line. This is not good news if you are a bull. The ADX line is meandering sideways which could be showing a lack of momentum on this downswing. That, and the fact that prices haven’t closed below the 40 week moving average yet, is the only good news technically. Fundamentalists are all long term bullish crude oil as they expect world demand to continue to rise over time. This may be true, but the chart is showing, at least, intermediate term, a negative outlook unless crude oil prices can hold and reverse from here. Stay tuned.
Could we be in for some surprises going in to 2010? Those may include: (and this is a contrarians dream by the way):
Could the US Dollar could be making an important bottom?
- Has the Euro made an important top?
- Has gold made an important top?
- Is the stock market about to rally much higher than we expect?
- Has crude oil topped out?
This all goes contrary to current thinking lately, but we have to pay attention to what the charts say as we go along. None of the things listed above have happened yet, but they may be developing. These markets are headed for some important decision points, long term, over the next month or so, in my opinion, technically.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
